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RURAL BANK OF ANDA, INC.

,
Petitioner,
- versus ROMAN CATHOLIC
ARCHBISHOP OF LINGAYENDAGUPAN,
Respondent.
G.R. No. 155051
The Case
This is a petition for review[1] of the Decision[2] dated 15 October 2001
and the Resolution dated 23 August 2002 of the Court of Appeals in CAG.R. CV No. 66478.

The Facts
The lot in dispute, Cadastral Lot 736 (Lot 736), is located in the Poblacion of
Binmaley, Pangasinan. Lot 736 has a total area of about 1,300 square
meters and is part of Lot 3. Cadastral Lot 737 and Lot 739 also form part of
Lot 3. Cadastral Lot 737 is known as Imeldas Park, while on Lot 739 is a
waiting shed for commuters. Lot 3 is bounded on the north by Lot 1 of Plan
II-5201-A and on the south by the national road. In front of Lot 736 is the
building of Mary Help of Christians Seminary (seminary) which is on Lot 1.
Lot 1 of Plan II-5201-A, which adjoins Lot 3 on the north, is titled in the
name of respondent Roman Catholic Archbishop of Lingayen (respondent)
under Transfer Certificate of Title No. 6375 (TCT 6375). An annotation on
TCT 6375 states that the ownership of Lot 3 is being claimed by both
respondent and the Municipality of Binmaley.
In 1958, the Rector of the seminary ordered the construction of the fence
separating Lot 736 from the national road to prevent the caretelas from
parking because the smell of horse manure was already bothering the
priests living in the seminary.[3] The concrete fence enclosing Lot 736 has
openings in the east, west, and center and has no gate. People can pass
through Lot 736 at any time of the day.[4]
On 22 December 1997, the Sangguniang Bayan of Binmaley, Pangasinan,
passed and approved Resolution Nos. 104[5] and 105.[6] Resolution No.
104 converted Lot 736 from an institutional lot to a commercial lot.
Resolution No. 105 authorized the municipal mayor to enter into a contract
of lease for 25 years with the Rural Bank of Anda over a portion of Lot 736
with an area of 252 square meters.[7]

In December 1997, Fr. Arenos, the director of the seminary, discovered that
a sawali fence was being constructed enclosing a portion of Lot 736. In
January 1998, the Municipal Mayor of Binmaley, Rolando Domalanta (Mayor
Domalanta), came to the seminary to discuss the situation. Mayor
Domalanta and Fr. Arenos agreed that the construction of the building for
the Rural Bank of Anda should be stopped.
On 24 March 1998, respondent requested Mayor Domalanta to remove the
sawali fence and restore the concrete fence. On 20 May 1998, Mayor
Domalanta informed respondent that the construction of the building of the
Rural Bank of Anda would resume but that he was willing to discuss with
respondent to resolve the problem concerning Lot 736.
On 1 June 1998, respondent filed a complaint for Abatement of Illegal
Constructions, Injunction and Damages with Writ of Preliminary Injunction
in the Regional Trial Court of Lingayen, Pangasinan. On 24 August 1998, the
trial court ordered the issuance of a writ of preliminary injunction.
On 4 January 2000, the trial court rendered a decision, the dispositive
portion of which reads:
WHEREFORE, in the light of the foregoing, judgment is hereby rendered in
favor of the plaintiff [Roman Catholic Archbishop of Lingayen-Dagupan]:
1.

Making the writ of preliminary injunction permanent;

2.
Ordering the defendants to cause to be restored the concrete wall
with iron railings, to cause to be removed the sawali fence, both at the
expense of the defendants, jointly and severally, and
3.
Condemning the defendants to pay jointly and severally, to the
plaintiff the amount of P25,000.00 as litigation expenses, attorneys fees in
the amount of P50,000.00 and the costs of this suit.
SO ORDERED.[8]

On appeal, the Court of Appeals affirmed the decision with the modification
that the awards of litigation expenses, attorneys fees, and costs should be
deleted. The Court of Appeals subsequently denied the motion for
reconsideration of the Municipality of Binmaley and the Rural Bank of Anda.

The Ruling of the Trial Court


The trial court found that Lot 736 is not covered by any Torrens title either
in the name of respondent or in the name of the Municipality of Binmaley.

The trial court held that Lot 736 is public in nature. Since Lot 736 is
property of public dominion, it is outside the commerce of man. Thus, the
Sangguniang Bayan of Binmaley, Pangasinan exceeded its authority when
it adopted Resolution Nos. 104 and 105 converting Lot 736 from an
institutional lot to a commercial lot and authorizing the municipal mayor to
enter into a contract of lease for 25 years with the Rural Bank of Anda over
a 252 square meter portion of Lot 736 .

The Ruling of the Court of Appeals

On the other hand, the Municipality of Binmaley alleged that it is the sole
claimant of Lot 736 based on the Property Identification Map, Tax Mapping
Control Roll of the Municipality of Binmaley, and the Lot Data Computation
in the name of the Municipality of Binmaley. However, these documents
merely show that the Municipality of Binmaley is a mere claimant of Lot
736. In fact, the chief of Survey Division of the Department of Environment
and Natural Resources, San Fernando City, La Union testified that the
cadastral survey[11] of Lot 736, which was surveyed for the Municipality of
Binmaley in 1989, had not been approved.[12] The cadastral survey was
based on the Lot Data Computation[13] of Lot 736 which was likewise
contracted by the Municipality of Binmaley in 1989.

The Court of Appeals agreed with the trial court that Lot 736 is property of
public dominion and is used by the public as a pathway. Respondent and
the Municipality of Binmaley are mere claimants with no sufficient evidence
to prove their ownership of Lot 736. The Court of Appeals held that
property of public dominion is intended for the common welfare and cannot
be the object of appropriation either by the state or by private persons.
Since Lot 736 is for public use, it is a property of public dominion and it is
not susceptible of private ownership. Thus, Resolution Nos. 104 and 105
are void for being enacted beyond the powers of the Sangguniang Bayan of
Binmaley. The contract of lease between the Municipality of Binmaley and
the Rural Bank of Anda is therefore void.

The records show that Lot 736 is used as a pathway going to the school,
the seminary, or the church, which are all located on lots adjoined to Lot
736.[14] Lot 736 was also used for parking and playground.[15] In other
words, Lot 736 was used by the public in general.

The Court of Appeals also ruled that since neither the respondent nor the
Municipality of Binmaley owns Lot 736, there is no basis for the monetary
awards granted by the trial court.

There being no evidence whatever that the property in question was ever
acquired by the applicants or their ancestors either by composition title
from the Spanish Government or by possessory information title or by any
other means for the acquisition of public lands, the property must be held
to be public domain. For it is well settled that no public land can be
acquired by private persons without any grant, express or implied, from the
government. It is indispensable then that there be a showing of a title from
the state or any other mode of acquisition recognized by law. The most
recent restatement of the doctrine, found in an opinion of Justice J.B.L.
Reyes follows: The applicant, having failed to establish his right or title over
the northern portion of Lot No. 463 involved in the present controversy,
and there being no showing that the same has been acquired by any
private person from the Government, either by purchase or by grant, the
property is and remains part of the public domain.

The Issue
The issue in this case is whether Resolution Nos. 104 and 105 of the
Sangguniang Bayan of Binmaley are valid.
The Ruling of the Court
The petition has no merit.
Both respondent and the Municipality of Binmaley admit that they do not
have title over Lot 736. The Assistant Chief of the Aggregate Survey
Section of the Land Management Services in Region I testified that no
document of ownership for Lot 736 was ever presented to their office.[9]
Respondent claims Lot 736 based on its alleged open, continuous, adverse,
and uninterrupted possession of Lot 736. However, the records reveal
otherwise. Even the witnesses for respondent testified that Lot 736 was
used by the people as pathway, parking space, and playground.[10]

Both respondent and the Municipality of Binmaley failed to prove their right
over Lot 736. Since Lot 736 has never been acquired by anyone through
purchase or grant or any other mode of acquisition, Lot 736 remains part of
the public domain and is owned by the state. As held in Hong Hok v. David:
[16]

This is in accordance with the Regalian doctrine which holds that the state
owns all lands and waters of the public domain.[17] Thus, under Article XII,
Section 2 of the Constitution: All lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all forces of potential
energy, fisheries, forests or timber, wildlife, flora and fauna, and other
natural resources are owned by the state.
Municipal corporations cannot appropriate to themselves public or
government lands without prior grant from the government.[18] Since Lot
736 is owned by the state, the Sangguniang Bayan of Binmaley exceeded

its authority in passing Resolution Nos. 104 and 105. Thus, Resolution Nos.
104 and 105 are void and consequently, the contract of lease between the
Municipality of Binmaley and the Rural Bank of Anda over a portion of Lot
736 is also void.

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 15


October 2001 and the Resolution dated 23 August 2002 of the Court of
Appeals.

SO ORDERED.

G.R. No. 135385


December 6, 2000
ISAGANI CRUZ and CESAR EUROPA, petitioners,
vs.
SECRETARY OF ENVIRONMENT AND NATURAL RESOURCES,
SECRETARY OF BUDGET AND MANAGEMENT and CHAIRMAN and
COMMISSIONERS OF THE NATIONAL COMMISSION ON INDIGENOUS
PEOPLES, respondents.
RESOLUTION
PER CURIAM:
Petitioners Isagani Cruz and Cesar Europa brought this suit for prohibition
and mandamus as citizens and taxpayers, assailing the constitutionality of
certain provisions of Republic Act No. 8371 (R.A. 8371), otherwise known as
the Indigenous Peoples Rights Act of 1997 (IPRA), and its Implementing
Rules and Regulations (Implementing Rules).
In its resolution of September 29, 1998, the Court required respondents to
comment.1 In compliance, respondents Chairperson and Commissioners of
the National Commission on Indigenous Peoples (NCIP), the government
agency created under the IPRA to implement its provisions, filed on
October 13, 1998 their Comment to the Petition, in which they defend the
constitutionality of the IPRA and pray that the petition be dismissed for lack
of merit.
On October 19, 1998, respondents Secretary of the Department of
Environment and Natural Resources (DENR) and Secretary of the
Department of Budget and Management (DBM) filed through the Solicitor
General a consolidated Comment. The Solicitor General is of the view that
the IPRA is partly unconstitutional on the ground that it grants ownership
over natural resources to indigenous peoples and prays that the petition be
granted in part.
On November 10, 1998, a group of intervenors, composed of Sen. Juan
Flavier, one of the authors of the IPRA, Mr. Ponciano Bennagen, a member
of the 1986 Constitutional Commission, and the leaders and members of
112 groups of indigenous peoples (Flavier, et. al), filed their Motion for

Leave to Intervene. They join the NCIP in defending the constitutionality of


IPRA and praying for the dismissal of the petition.
On March 22, 1999, the Commission on Human Rights (CHR) likewise filed
a Motion to Intervene and/or to Appear as Amicus Curiae. The CHR asserts
that IPRA is an expression of the principle of parens patriae and that the
State has the responsibility to protect and guarantee the rights of those
who are at a serious disadvantage like indigenous peoples. For this reason
it prays that the petition be dismissed.
On March 23, 1999, another group, composed of the Ikalahan Indigenous
People and the Haribon Foundation for the Conservation of Natural
Resources, Inc. (Haribon, et al.), filed a motion to Intervene with attached
Comment-in-Intervention. They agree with the NCIP and Flavier, et al. that
IPRA is consistent with the Constitution and pray that the petition for
prohibition and mandamus be dismissed.
The motions for intervention of the aforesaid groups and organizations
were granted.
Oral arguments were heard on April 13, 1999. Thereafter, the parties and
intervenors filed their respective memoranda in which they reiterate the
arguments adduced in their earlier pleadings and during the hearing.
Petitioners assail the constitutionality of the following provisions of the IPRA
and its Implementing Rules on the ground that they amount to an unlawful
deprivation of the States ownership over lands of the public domain as
well as minerals and other natural resources therein, in violation of the
regalian doctrine embodied in Section 2, Article XII of the Constitution:
"(1) Section 3(a) which defines the extent and coverage of ancestral
domains, and Section 3(b) which, in turn, defines ancestral lands;
"(2) Section 5, in relation to section 3(a), which provides that ancestral
domains including inalienable public lands, bodies of water, mineral and
other resources found within ancestral domains are private but community
property of the indigenous peoples;
"(3) Section 6 in relation to section 3(a) and 3(b) which defines the
composition of ancestral domains and ancestral lands;
"(4) Section 7 which recognizes and enumerates the rights of the
indigenous peoples over the ancestral domains;
(5) Section 8 which recognizes and enumerates the rights of the indigenous
peoples over the ancestral lands;
"(6) Section 57 which provides for priority rights of the indigenous peoples
in the harvesting, extraction, development or exploration of minerals and
other natural resources within the areas claimed to be their ancestral
domains, and the right to enter into agreements with nonindigenous
peoples for the development and utilization of natural resources therein for
a period not exceeding 25 years, renewable for not more than 25 years;
and
"(7) Section 58 which gives the indigenous peoples the responsibility to
maintain, develop, protect and conserve the ancestral domains and
portions thereof which are found to be necessary for critical watersheds,
mangroves, wildlife sanctuaries, wilderness, protected areas, forest cover
or reforestation."2
Petitioners also content that, by providing for an all-encompassing
definition of "ancestral domains" and "ancestral lands" which might even

include private lands found within said areas, Sections 3(a) and 3(b) violate
the rights of private landowners.3
In addition, petitioners question the provisions of the IPRA defining the
powers and jurisdiction of the NCIP and making customary law applicable
to the settlement of disputes involving ancestral domains and ancestral
lands on the ground that these provisions violate the due process clause of
the Constitution.4
These provisions are:
"(1) sections 51 to 53 and 59 which detail the process of delineation and
recognition of ancestral domains and which vest on the NCIP the sole
authority to delineate ancestral domains and ancestral lands;
"(2) Section 52[i] which provides that upon certification by the NCIP that a
particular area is an ancestral domain and upon notification to the
following officials, namely, the Secretary of Environment and Natural
Resources, Secretary of Interior and Local Governments, Secretary of
Justice and Commissioner of the National Development Corporation, the
jurisdiction of said officials over said area terminates;
"(3) Section 63 which provides the customary law, traditions and practices
of indigenous peoples shall be applied first with respect to property rights,
claims of ownership, hereditary succession and settlement of land
disputes, and that any doubt or ambiguity in the interpretation thereof
shall be resolved in favor of the indigenous peoples;
"(4) Section 65 which states that customary laws and practices shall be
used to resolve disputes involving indigenous peoples; and
"(5) Section 66 which vests on the NCIP the jurisdiction over all claims and
disputes involving rights of the indigenous peoples." 5
Finally, petitioners assail the validity of Rule VII, Part II, Section 1 of the
NCIP Administrative Order No. 1, series of 1998, which provides that "the
administrative relationship of the NCIP to the Office of the President is
characterized as a lateral but autonomous relationship for purposes of
policy and program coordination." They contend that said Rule infringes
upon the Presidents power of control over executive departments under
Section 17, Article VII of the Constitution.6
Petitioners pray for the following:
"(1) A declaration that Sections 3, 5, 6, 7, 8, 52[I], 57, 58, 59, 63, 65 and 66
and other related provisions of R.A. 8371 are unconstitutional and invalid;
"(2) The issuance of a writ of prohibition directing the Chairperson and
Commissioners of the NCIP to cease and desist from implementing the
assailed provisions of R.A. 8371 and its Implementing Rules;
"(3) The issuance of a writ of prohibition directing the Secretary of the
Department of Environment and Natural Resources to cease and desist
from implementing Department of Environment and Natural Resources
Circular No. 2, series of 1998;
"(4) The issuance of a writ of prohibition directing the Secretary of Budget
and Management to cease and desist from disbursing public funds for the
implementation of the assailed provisions of R.A. 8371; and
"(5) The issuance of a writ of mandamus commanding the Secretary of
Environment and Natural Resources to comply with his duty of carrying out
the States constitutional mandate to control and supervise the exploration,
development, utilization and conservation of Philippine natural resources." 7

After due deliberation on the petition, the members of the Court voted as
follows:
Seven (7) voted to dismiss the petition. Justice Kapunan filed an opinion,
which the Chief Justice and Justices Bellosillo, Quisumbing, and Santiago
join, sustaining the validity of the challenged provisions of R.A. 8371.
Justice Puno also filed a separate opinion sustaining all challenged
provisions of the law with the exception of Section 1, Part II, Rule III of NCIP
Administrative Order No. 1, series of 1998, the Rules and Regulations
Implementing the IPRA, and Section 57 of the IPRA which he contends
should be interpreted as dealing with the large-scale exploitation of natural
resources and should be read in conjunction with Section 2, Article XII of
the 1987 Constitution. On the other hand, Justice Mendoza voted to dismiss
the petition solely on the ground that it does not raise a justiciable
controversy and petitioners do not have standing to question the
constitutionality of R.A. 8371.
Seven (7) other members of the Court voted to grant the petition. Justice
Panganiban filed a separate opinion expressing the view that Sections 3 (a)
(b), 5, 6, 7 (a)(b), 8, and related provisions of R.A. 8371 are
unconstitutional. He reserves judgment on the constitutionality of Sections
58, 59, 65, and 66 of the law, which he believes must await the filing of
specific cases by those whose rights may have been violated by the IPRA.
Justice Vitug also filed a separate opinion expressing the view that Sections
3(a), 7, and 57 of R.A. 8371 are unconstitutional. Justices Melo, Pardo,
Buena, Gonzaga-Reyes, and De Leon join in the separate opinions of
Justices Panganiban and Vitug.
As the votes were equally divided (7 to 7) and the necessary majority was
not obtained, the case was redeliberated upon. However, after
redeliberation, the voting remained the same. Accordingly, pursuant to
Rule 56, Section 7 of the Rules of Civil Procedure, the petition is
DISMISSED.
Attached hereto and made integral parts thereof are the separate opinions
of Justices Puno, Vitug, Kapunan, Mendoza, and Panganiban.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Melo, Quisumbing, Pardo, Buena, Gonzaga-Reyes,
Ynares-Santiago, and De Leon, Jr., JJ., concur.
Puno, Vitug, Kapunan, Mendoza and Panganiban JJ., see separate opinion
G.R. No. L-8936
October 2, 1915
CONSUELO LEGARDA, with her husband MAURO PRIETO, plaintiffsappellants,
vs.
N.M. SALEEBY, defendant-appellee.
Singson, Ledesma and Lim for appellants.D.R. Williams for appellee.
JOHNSON, J.:
From the record the following facts appear:
First. That the plaintiffs and the defendant occupy, as owners, adjoining
lots in the district of Ermita in the city of Manila.
Second. That there exists and has existed a number of years a stone wall
between the said lots. Said wall is located on the lot of the plaintiffs.

Third. That the plaintiffs, on the 2d day of March, 1906, presented a


petition in the Court of Land Registration for the registration of their lot.
After a consideration of said petition the court, on the 25th day of October,
1906, decreed that the title of the plaintiffs should be registered and issued
to them the original certificate provided for under the torrens system. Said
registration and certificate included the wall.
Fourth. Later the predecessor of the defendant presented a petition in the
Court of Land Registration for the registration of the lot now occupied by
him. On the 25th day of March, 1912, the court decreed the registration of
said title and issued the original certificate provided for under the torrens
system. The description of the lot given in the petition of the defendant
also included said wall.
Fifth. Several months later (the 13th day of December, 1912) the plaintiffs
discovered that the wall which had been included in the certificate granted
to them had also been included in the certificate granted to the
defendant .They immediately presented a petition in the Court of Land
Registration for an adjustment and correction of the error committed by
including said wall in the registered title of each of said parties. The lower
court however, without notice to the defendant, denied said petition upon
the theory that, during the pendency of the petition for the registration of
the defendant's land, they failed to make any objection to the registration
of said lot, including the wall, in the name of the defendant.
Sixth. That the land occupied by t he wall is registered in the name of each
of the owners of the adjoining lots. The wall is not a joint wall.
Under these facts, who is the owner of the wall and the land occupied by
it?
The decision of the lower court is based upon the theory that the action for
the registration of the lot of the defendant was a judicial proceeding and
that the judgment or decree was binding upon all parties who did not
appear and oppose it. In other words, by reason of the fact that the
plaintiffs had not opposed the registration of that part of the lot on which
the wall was situate they had lost it, even though it had been theretofore
registered in their name. Granting that theory to be correct one, and
granting even that the wall and the land occupied by it, in fact, belonged to
the defendant and his predecessors, then the same theory should be
applied to the defendant himself. Applying that theory to him, he had
already lost whatever right he had therein, by permitting the plaintiffs to
have the same registered in their name, more than six years before.
Having thus lost hid right, may he be permitted to regain it by simply
including it in a petition for registration? The plaintiffs having secured the
registration of their lot, including the wall, were they obliged to constantly
be on the alert and to watch all the proceedings in the land court to see
that some one else was not having all, or a portion of the same, registered?
If that question is to be answered in the affirmative, then the whole
scheme and purpose of the torrens system of land registration must fail.
The real purpose of that system is to quiet title to land; to put a stop
forever to any question of the legality of the title, except claims which were
noted at the time of registration, in the certificate, or which may arise
subsequent thereto. That being the purpose of the law, it would seem that
once a title is registered the owner may rest secure, without the necessity
of waiting in the portals of the court, or sitting in the "mirador de su casa,"

to avoid the possibility of losing his land. Of course, it can not be denied
that the proceeding for the registration of land under the torrens system is
judicial (Escueta vs. .Director of Lands, 16 Phil. Rep., 482). It is clothed with
all the forms of an action and the result is final and binding upon all the
world. It is an action in rem. (Escueta vs. Director of Lands (supra); Grey
Alba vs. De la Cruz, 17 Phil. rep., 49 Roxas vs. Enriquez, 29 Phil. Rep., 31;
Tyler vs. Judges, 175 Mass., 51 American Land Co. vs. Zeiss, 219 U.S., 47.)
While the proceeding is judicial, it involves more in its consequences than
does an ordinary action. All the world are parties, including the
government. After the registration is complete and final and there exists no
fraud, there are no innocent third parties who may claim an interest. The
rights of all the world are foreclosed by the decree of registration. The
government itself assumes the burden of giving notice to all parties. To
permit persons who are parties in the registration proceeding (and they are
all the world) to again litigate the same questions, and to again cast doubt
upon the validity of the registered title, would destroy the very purpose
and intent of the law. The registration, under the torrens system, does not
give the owner any better title than he had. If he does not already have a
perfect title, he can not have it registered. Fee simple titles only may be
registered. The certificate of registration accumulates in open document a
precise and correct statement of the exact status of the fee held by its
owner. The certificate, in the absence of fraud, is the evidence of title and
shows exactly the real interest of its owner. The title once registered, with
very few exceptions, should not thereafter be impugned, altered, changed,
modified, enlarged, or diminished, except in some direct proceeding
permitted by law. Otherwise all security in registered titles would be lost. A
registered title can not be altered, modified, enlarged, or diminished in a
collateral proceeding and not even by a direct proceeding, after the lapse
of the period prescribed by law.
For the difficulty involved in the present case the Act (No. 496) providing
for the registration of titles under the torrens system affords us no remedy.
There is no provision in said Act giving the parties relief under conditions
like the present. There is nothing in the Act which indicates who should be
the owner of land which has been registered in the name of two different
persons.
The rule, we think, is well settled that the decree ordering the registration
of a particular parcel of land is a bar to future litigation over the same
between the same parties .In view of the fact that all the world are parties,
it must follow that future litigation over the title is forever barred; there can
be no persons who are not parties to the action. This, we think, is the rule,
except as to rights which are noted in the certificate or which arise
subsequently, and with certain other exceptions which need not be
dismissed at present. A title once registered can not be defeated, even by
an adverse, open, and notorious possession. Registered title under the
torrens system can not be defeated by prescription (section 46, Act No.
496). The title, once registered, is notice to the world. All persons must
take notice. No one can plead ignorance of the registration.
The question, who is the owner of land registered in the name of two
different persons, has been presented to the courts in other jurisdictions. In
some jurisdictions, where the "torrens" system has been adopted, the
difficulty has been settled by express statutory provision. In others it has

been settled by the courts. Hogg, in his excellent discussion of the


"Australian Torrens System," at page 823, says: "The general rule is that in
the case of two certificates of title, purporting to include the same land, the
earlier in date prevails, whether the land comprised in the latter certificate
be wholly, or only in part, comprised in the earlier certificate. (Oelkers vs.
Merry, 2 Q.S.C.R., 193; Miller vs. Davy, 7 N.Z.R., 155; Lloyd vs. Myfield, 7
A.L.T. (V.) 48; Stevens vs. Williams, 12 V.L. R., 152; Register of Titles, vs.
Esperance Land Co., 1 W.A.R., 118.)" Hogg adds however that, "if it can be
very clearly ascertained by the ordinary rules of construction relating to
written documents, that the inclusion of the land in the certificate of title of
prior date is a mistake, the mistake may be rectified by holding the latter of
the two certificates of title to be conclusive." (See Hogg on the "Australian
torrens System," supra, and cases cited. See also the excellent work of
Niblack in his "Analysis of the Torrens System," page 99.) Niblack, in
discussing the general question, said: "Where two certificates purport to
include the same land the earlier in date prevails. ... In successive
registrations, where more than one certificate is issued in respect of a
particular estate or interest in land, the person claiming under the prior
certificates is entitled to the estate or interest; and that person is deemed
to hold under the prior certificate who is the holder of, or whose claim is
derived directly or indirectly from the person who was the holder of the
earliest certificate issued in respect thereof. While the acts in this country
do not expressly cover the case of the issue of two certificates for the same
land, they provide that a registered owner shall hold the title, and the
effect of this undoubtedly is that where two certificates purport to include
the same registered land, the holder of the earlier one continues to hold
the title" (p. 237).
Section 38 of Act No. 496, provides that; "It (the decree of registration)
shall be conclusive upon and against all persons, including the Insular
Government and all the branches thereof, whether mentioned by name in
the application, notice, or citation, or included in the general description
"To all whom it may concern." Such decree shall not be opened by reason
of the absence, infancy, or other disability of any person affected thereby,
nor by any proceeding in any court for reversing judgments or decrees;
subject, however, to the right of any person deprived of land or of any
estate or interest therein by decree of registration obtained by fraud to file
in the Court of Land Registration a petition for review within one year after
entry of the decree (of registration), provided no innocent purchaser for
value has acquired an interest.
It will be noted, from said section, that the "decree of registration" shall not
be opened, for any reason, in any court, except for fraud, and not even for
fraud, after the lapse of one year. If then the decree of registration can not
be opened for any reason, except for fraud, in a direct proceeding for that
purpose, may such decree be opened or set aside in a collateral
proceeding by including a portion of the land in a subsequent certificate or
decree of registration? We do not believe the law contemplated that a
person could be deprived of his registered title in that way.
We have in this jurisdiction a general statutory provision which governs the
right of the ownership of land when the same is registered in the ordinary
registry in the name of two persons. Article 1473 of the Civil Code provides,
among other things, that when one piece of real property had been sold to

two different persons it shall belong to the person acquiring it, who first
inscribes it in the registry. This rule, of course, presupposes that each of
the vendees or purchasers has acquired title to the land. The real
ownership in such a case depends upon priority of registration. While we do
not now decide that the general provisions of the Civil Code are applicable
to the Land Registration Act, even though we see no objection thereto, yet
we think, in the absence of other express provisions, they should have a
persuasive influence in adopting a rule for governing the effect of a double
registration under said Act. Adopting the rule which we believe to be more
in consonance with the purposes and the real intent of the torrens system,
we are of the opinion and so decree that in case land has been registered
under the Land Registration Act in the name of two different persons, the
earlier in date shall prevail.
In reaching the above conclusion, we have not overlooked the forceful
argument of the appellee. He says, among other things; "When Prieto et al.
were served with notice of the application of Teus (the predecessor of the
defendant) they became defendants in a proceeding wherein he, Teus, was
seeking to foreclose their right, and that of orders, to the parcel of land
described in his application. Through their failure to appear and contest his
right thereto, and the subsequent entry of a default judgment against
them, they became irrevocably bound by the decree adjudicating such land
to Teus. They had their day in court and can not set up their own omission
as ground for impugning the validity of a judgment duly entered by a court
of competent jurisdiction. To decide otherwise would be to hold that lands
with torrens titles are above the law and beyond the jurisdiction of the
courts".
As was said above, the primary and fundamental purpose of the torrens
system is to quiet title. If the holder of a certificate cannot rest secure in
this registered title then the purpose of the law is defeated. If those dealing
with registered land cannot rely upon the certificate, then nothing has been
gained by the registration and the expense incurred thereby has been in
vain. If the holder may lose a strip of his registered land by the method
adopted in the present case, he may lose it all. Suppose within the six
years which elapsed after the plaintiff had secured their title, they had
mortgaged or sold their right, what would be the position or right of the
mortgagee or vendee? That mistakes are bound to occur cannot be denied,
and sometimes the damage done thereby is irreparable. It is the duty of
the courts to adjust the rights of the parties under such circumstances so
as to minimize such damages, taking into consideration al of the conditions
and the diligence of the respective parties to avoid them. In the present
case, the appellee was the first negligent (granting that he was the real
owner, and if he was not the real owner he can not complain) in not
opposing the registration in the name of the appellants. He was a partydefendant in an action for the registration of the lot in question, in the
name of the appellants, in 1906. "Through his failure to appear and to
oppose such registration, and the subsequent entry of a default judgment
against him, he became irrevocably bound by the decree adjudicating such
land to the appellants. He had his day in court and should not be permitted
to set up his own omissions as the ground for impugning the validity of a
judgment duly entered by a court of competent jurisdiction." Granting that
he was the owner of the land upon which the wall is located, his failure to

oppose the registration of the same in the name of the appellants, in the
absence of fraud, forever closes his mouth against impugning the validity
of that judgment. There is no more reason why the doctrine invoked by the
appellee should be applied to the appellants than to him.
We have decided, in case of double registration under the Land
Registration Act, that the owner of the earliest certificate is the owner of
the land. That is the rule between original parties. May this rule be applied
to successive vendees of the owners of such certificates? Suppose that one
or the other of the parties, before the error is discovered, transfers his
original certificate to an "innocent purchaser." The general rule is that the
vendee of land has no greater right, title, or interest than his vendor; that
he acquires the right which his vendor had, only. Under that rule the
vendee of the earlier certificate would be the owner as against the vendee
of the owner of the later certificate.
We find statutory provisions which, upon first reading, seem to cast some
doubt upon the rule that the vendee acquires the interest of the vendor
only. Sections 38, 55, and 112 of Act No. 496 indicate that the vendee may
acquire rights and be protected against defenses which the vendor would
not. Said sections speak of available rights in favor of third parties which
are cut off by virtue of the sale of the land to an "innocent purchaser." That
is to say, persons who had had a right or interest in land wrongfully
included in an original certificate would be unable to enforce such rights
against an "innocent purchaser," by virtue of the provisions of said
sections. In the present case Teus had his land, including the wall,
registered in his name. He subsequently sold the same to the appellee. Is
the appellee an "innocent purchaser," as that phrase is used in said
sections? May those who have been deprived of their land by reason of a
mistake in the original certificate in favor of Teus be deprived of their right
to the same, by virtue of the sale by him to the appellee? Suppose the
appellants had sold their lot, including the wall, to an "innocent purchaser,"
would such purchaser be included in the phrase "innocent purchaser," as
the same is used in said sections? Under these examples there would be
two innocent purchasers of the same land, is said sections are to be
applied .Which of the two innocent purchasers, if they are both to be
regarded as innocent purchasers, should be protected under the provisions
of said sections? These questions indicate the difficulty with which we are
met in giving meaning and effect to the phrase "innocent purchaser," in
said sections.
May the purchaser of land which has been included in a "second original
certificate" ever be regarded as an "innocent purchaser," as against the
rights or interest of the owner of the first original certificate, his heirs,
assigns, or vendee? The first original certificate is recorded in the public
registry. It is never issued until it is recorded. The record notice to all the
world. All persons are charged with the knowledge of what it contains. All
persons dealing with the land so recorded, or any portion of it, must be
charged with notice of whatever it contains. The purchaser is charged with
notice of every fact shown by the record and is presumed to know every
fact which the record discloses .This rule is so well established that it is
scarcely necessary to cite authorities in its support (Northwestern National
Bank vs. Freeman, 171 U.S., 620, 629; Delvin on Real Estate, sections 710,
710 [a]).

When a conveyance has been properly recorded such record is constructive


notice of its contents and all interests, legal and equitable, included
therein. (Grandin vs. Anderson, 15 Ohio State, 286, 289; Orvis vs. Newell,
17 Conn., 97; Buchanan vs. Intentional Bank, 78 Ill., 500; Youngs vs.
Wilson, 27 N.Y., 351; McCabe vs. Grey, 20 Cal., 509; Montefiore vs. Browne,
7 House of Lords Cases, 341.)
Under the rule of notice, it is presumed that the purchaser has examined
every instrument of record affecting the title. Such presumption is
irrebutable. He is charged with notice of every fact shown by the record
and is presumed to know every fact which an examination of the record
would have disclosed. This presumption cannot be overcome by proof of
innocence or good faith. Otherwise the very purpose and object of the law
requiring a record would be destroyed. Such presumption cannot be
defeated by proof of want of knowledge of what the record contains any
more than one may be permitted to show that he was ignorant of the
provisions of the law. The rule that all persons must take notice of the facts
which the public record contains is a rule of law. The rule must be absolute.
Any variation would lead to endless confusion and useless litigation.
While there is no statutory provision in force here requiring that original
deeds of conveyance of real property be recorded, yet there is a rule
requiring mortgages to be recorded. (Arts. 1875 and 606 of the Civil Code.)
The record of a mortgage is indispensable to its validity. (Art .1875.) In the
face of that statute would the courts allow a mortgage to be valid which
had not been recorded, upon the plea of ignorance of the statutory
provision, when third parties were interested? May a purchaser of land,
subsequent to the recorded mortgage, plead ignorance of its existence,
and by reason of such ignorance have the land released from such lien?
Could a purchaser of land, after the recorded mortgage, be relieved from
the mortgage lien by the plea that he was a bona fide purchaser? May
there be a bona fide purchaser of said land, bona fide in the sense that he
had no knowledge of the existence of the mortgage? We believe the rule
that all persons must take notice of what the public record contains in just
as obligatory upon all persons as the rule that all men must know the law;
that no one can plead ignorance of the law. The fact that all men know the
law is contrary to the presumption. The conduct of men, at times, shows
clearly that they do not know the law. The rule, however, is mandatory and
obligatory, notwithstanding. It would be just as logical to allow the defense
of ignorance of the existence and contents of a public record.
In view, therefore, of the foregoing rules of law, may the purchaser of land
from the owner of the second original certificate be an "innocent
purchaser," when a part or all of such land had theretofore been registered
in the name of another, not the vendor? We are of the opinion that said
sections 38, 55, and 112 should not be applied to such purchasers. We do
not believe that the phrase "innocent purchaser should be applied to such
a purchaser. He cannot be regarded as an "innocent purchaser" because of
the facts contained in the record of the first original certificate. The rule
should not be applied to the purchaser of a parcel of land the vendor of
which is not the owner of the original certificate, or his successors. He, in
nonsense, can be an "innocent purchaser" of the portion of the land
included in another earlier original certificate. The rule of notice of what
the record contains precludes the idea of innocence. By reason of the prior

registry there cannot be an innocent purchaser of land included in a prior


original certificate and in a name other than that of the vendor, or his
successors. In order to minimize the difficulties we think this is the safe
rule to establish. We believe the phrase "innocent purchaser," used in said
sections, should be limited only to cases where unregistered land has been
wrongfully included in a certificate under the torrens system. When land is
once brought under the torrens system, the record of the original
certificate and all subsequent transfers thereof is notice to all the world.
That being the rule, could Teus even regarded as the holder in good fifth of
that part of the land included in his certificate of the appellants? We think
not. Suppose, for example, that Teus had never had his lot registered under
the torrens system. Suppose he had sold his lot to the appellee and had
included in his deed of transfer the very strip of land now in question.
Could his vendee be regarded as an "innocent purchaser" of said strip?
Would his vendee be an "innocent purchaser" of said strip? Certainly not.
The record of the original certificate of the appellants precludes the
possibility. Has the appellee gained any right by reason of the registration
of the strip of land in the name of his vendor? Applying the rule of notice
resulting from the record of the title of the appellants, the question must be
answered in the negative. We are of the opinion that these rules are more
in harmony with the purpose of Act No. 496 than the rule contended for by
the appellee. We believe that the purchaser from the owner of the later
certificate, and his successors, should be required to resort to his vendor
for damages, in case of a mistake like the present, rather than to molest
the holder of the first certificate who has been guilty of no negligence. The
holder of the first original certificate and his successors should be
permitted to rest secure in their title, against one who had acquired rights
in conflict therewith and who had full and complete knowledge of their
rights. The purchaser of land included in the second original certificate, by
reason of the facts contained in the public record and the knowledge with
which he is charged and by reason of his negligence, should suffer the loss,
if any, resulting from such purchase, rather than he who has obtained the
first certificate and who was innocent of any act of negligence.
The foregoing decision does not solve, nor pretend to solve, all the
difficulties resulting from double registration under the torrens system and
the subsequent transfer of the land. Neither do we now attempt to decide
the effect of the former registration in the ordinary registry upon the
registration under the torrens system. We are inclined to the view, without
deciding it, that the record under the torrens system, supersede all other
registries. If that view is correct then it will be sufficient, in dealing with
land registered and recorded alone. Once land is registered and recorded
under the torrens system, that record alone can be examined for the
purpose of ascertaining the real status of the title to the land.
It would be seen to a just and equitable rule, when two persons have
acquired equal rights in the same thing, to hold that the one who acquired
it first and who has complied with all the requirements of the law should be
protected.
In view of our conclusions, above stated, the judgment of the lower court
should be and is hereby revoked. The record is hereby returned to the court
now having and exercising the jurisdiction heretofore exercised by the land
court, with direction to make such orders and decrees in the premises as

may correct the error heretofore made in including the land in the second
original certificate issued in favor of the predecessor of the appellee, as
well as in all other duplicate certificates issued.
Without any findings as to costs, it is so ordered.
Arellano, C.J., Torrens, and Araullo, JJ., concur.

G.R. No. 114299 September 24, 1999


TRADERS ROYAL BANK, petitioner,
vs.
HON. COURT OF APPEALS, PATRIA, RUBY ANN, MARGARITA,
ROSARIO, CYNTHIA, LINDA JOY, all surnamed CAPAY and RAMON A.
GONZALES, respondents.
G.R. No. 118862 September 24, 1999
PATRIA, RUBY ANN, MARGARITA, ROSARIO, CYNTHIA, LINDA JOY, all
surnamed CAPAY, and RAMON A. GONZALES, petitioners,
vs.
SPS. HONORATO D. SANTOS and MARIA CRISTINA S. SANTOS, SPS.
CECILIO L. PE and JOSEFINA L. PE, FLORA LARON WESCOMBE, SPS.
TELESFORO P. ALFELOR II and LIZA R. ALFELOR, SPS. DEAN
RODERICK FERNANDO and LAARNI MAGDAMO FERNANDO,
REMEDIOS OCA, DEVELOPMENT BANK OF THE PHILIPPINES and
TRADERS ROYAL BANK, respondents.
KAPUNAN, J.:
The present controversy has its roots in a mortgage executed by the
spouses Maximo and Patria Capay in favor of Traders Royal Bank (TRB)
pursuant to a loan extended by the latter to the former. The mortgage
covered several properties, including a parcel of land, the subject of the
presentdispute. 1 The loan became due on January 8, 1964 and the same
having remained unpaid, TRB instituted extra-judicial foreclosure
proceedings upon the mortgaged property.1wphi1.nt
To prevent the property's sale by public auction, the Capays, on September
22, 1966, filed a petition for prohibition with preliminary injunction (Civil
Case No. Q-10453) before the Court of First Instance (CFI) of Rizal, alleging
that the mortgage was void since they did not receive the proceeds of the
loan. The trial court initially granted the Capays' prayer for preliminary
injunction.
On March 17, 1967, the Capays caused to be filed in the Register of Deeds
of Baguio City a notice of lis pendens over the disputed property. Said
notice was entered in the Day Book, as well as in the Capays' certificate of
title.
Subsequently, the injunction issued by the trial court was lifted thus
allowing the foreclosure sale to proceed. Foreclosure proceedings were
initiated and on October 17, 1968, the property was sold to TRB which was
the highest bidder at the auction sale. A sheriff certificate of sale was
issued in its name on the same day. On February 25, 1970, the property
was consolidated in the name of TRB, the sole bidder in the sale. TCT No. T-

6595 in the name of the Capay spouses was then cancelled and a new one,
TCT No. T-16272, 2 was entered in the bank's name. The notice of lis
pendens, however, was not carried over in the certificate of title issued in
the name TRB.
Thereafter, the Capays filed with the CFI a supplemental complaint praying
for the recovery of the property with damages and attorney's fees. Trial in
Civil Case No. Q-10453 proceeded and, on October 3, 1977, the CFI
rendered its decision declaring the mortgage void for want of
consideration. The CFI ordered, among other things, the cancellation of TCT
No. T-16272 in the name of TRB and the issuance of new certificates of title
in the name of the Capay spouses.
TRB appealed to the Court of Appeals. While the case was pending in the
Court of Appeals, TRB on March 17, 1982 sold the land to Emelita Santiago
in whose name a new certificate of title, TCT No. 33774, 3 was issued, also,
without any notice of lis pendens annotated thereon. Santiago in turn
divided the land into six (6) lots and sold these to Marcial Alcantara,
Armando Cruz and Artemio Sanchez, who became co-owners thereof. 4
Alcantara and his co-owners developed the property and thereafter sold
the six (6) lots to seperate buyers who issued seperate titles, again,
bearing no notice of lis pendens. 5
On July 30, 1982, the Court of Appeals rendered its decision modifying the
decision of the trial court as to the award of damages but affirming the
same in all other respects.
For having been filed out of time and for lack of merit, the petition for
certiorari filed by TRB before this Court 6 was denied in a Resolution dated
September 12, 1983. TRB's motion for reconsideration was similarly denied
in a Resolution dated October 12, 1983. The Court's September 12, 1983
Resolution having become final and executory on November 9, 1983, the
trial court issued a writ of execution directing the Register of Deeds of
Baguio City to cancel TCT No. 16272 in the name of TRB, and to issue a
new one in the name of the Capay spouses.
Said writ, however, could not be implemented because of the successive
subsequent transfers of the subdivided property to buyers who obtained
separate titles thereto. Thus, a complaint for recovery of possession
ownership dated 8 June 1985 was filed before the Quezon City Regional
Trial Court against TRB and the subsequent transferees of the property, the
respondents in G.R. No. 118862 (hereinafter, "the non-bank respondents").
Plaintiffs in said case were Patria Capay, her children by Maximo 7 who
succeeded him upon his death on August 25, 1976, and Ramon Gonzales,
counsel of the spouses in Civil Case No. Q-10453 who become co-owner of
the property to the extent of 35% thereof as his attorney's fees
(collectively, "the Capays"). On March 27, 1991, the trial court rendered its
decision, the dispositive portion of which states:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs against
the defendants and ordering the Register of Deeds for Baguio to cancel TCT
No. T-36177, Books 198, Page 177 in the names of defendants Spouses
Honorato D. Santos and Maria Cristina Santos; to cancel TCT No. 36707,
Book 201, Page 107 in the names of defendant Spouses Cecilio Pe and
Josefina L. Pe; to cancel TCT No. T-36051, Book 198, Page 51 in the name of
Flora Laron Wescombe, married to Kevin Lind Wescombe (now deceased);
to cancel TCT No. 36147, Book 198, page 147 in the names of Spouses

Telesforo P. Alfelor II and Liza R. Alfelor; to cancel TCT No. T-36730, Book
201, Page 130 in the names of Spouses Dean Roderick Fernando and Laarni
Magdamo Fernando; to cancel TCT No. 37437, Book 205, Page 37 in the
name of Remedios Oca, and issue new ones free from all liens and
encumbrances, together with all the improvements therein in the names of
plaintiffs sharing pro indiviso as follows: 35% to Ramon A. Gonzales,
married to Lilia Y. Gonzales, of legal age, with postal address at 23 Sunrise
Hill, New Manila, Quezon City 37.92% to Patria B. Capay, of legal age,
widow, Filipino; 5.41% each to Ruby Ann Capay, of legal age, Filipino
married to Pokka Vainio, Finnish citizen; Chona Margarita Capay, of legal
age, Filipino, married to Waldo Flores; Rosario Capay of legal age, Filipino,
married to Jose Cuaycong, Jr.; Cynthia Capay, of legal age, Filipino, married
to Raul Flores; Linda Joy Capay, of legal age, Filipino, married to Pedro
Duran, all with postal address at 37 Sampaguita St., Capitolville Subd.,
Bacolod City, ordering said defendants to vacate the premises in question
and restoring plaintiffs thereto and for defendant Traders Royal Bank to pay
each of the plaintiffs moral damages in the amount of P100,000.00,
P40,000.00 in exemplary damages and P40,000.00 as attorney's fees, all
with legal interest from the filing of the complaint, with costs against
defendants.
SO ORDERED. 8
TRB and the non-bank respondents appealed to the Court of Appeals. In a
Decision promulgated on February 24, 1994 in CA-G.R. CV No. 33920, the
appellate court affirmed the decision of the trial court in toto. 9 It ruled that
the non-bank respondents cannot be considered as purchasers for value
and in good faith, having purchased the property subsequent to the action
in Civil Case No. Q-10453 and that while the notice of lis pendens was not
carried over to TRB's certificate of title, as well as to the subsequent
transferees' titles, it was entered in the Day Book which is sufficient to
constitute registration and notice to all persons of such adverse claim,
citing the cases of Villasor vs. Camon, 10 Levin vs. Bass 11 and Director of
Lands vs. Reyes. 12
As regard TRB, the Court of Appeals said that the bank was in bad faith
when it sold the property knowing that it was under the litigation and
without informing the buyer of that fact.
On April 26, 1994, TRB filed with this Court a petition for review to set aside
the CA decision, docketed herein as G.R. No. 114299, invoking the following
grounds:
I.
THE RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE
AND SERIOUS ERROR OF LAW IN PROMULGATING THE DISPUTED DECISION
AND THEREBY DECIDED A QUESTION OF SUBSTANCE WHOLLY CONTRARY
TO SETTLED JURISPRUDENCE AND TOTALLY NOT IN ACCORD WITH
APPLICABLE DECISION OF THIS HONORABLE SUPREME COURT.
II.
THE RESPONDENT HONORABLE COURT OF APPEALS HAS COMMITTED SO
GRAVE AND SERIOUS ERRORS OF LAW IN SANCTIONING A DEPARTURE
FROM THE USUAL AND ACCEPTED COURSE OF JUDICIAL PROCEEDING AS
TO CALL FOR THE EXERCISE OF THE POWER OF BY THIS HONORABLE
SUPREME COURT.

a) The public respondent has plainly and manifestly acted whimsically,


arbitrarily, capriciously, with grave abuse of discretion, in excess of
jurisdiction tantamount to lack of jurisdiction.
xxx xxx xxx
b) The public respondent erred in not finding that it was not the fault of
petitioner when the notice of lis pendens was not carried over to its new
title.
xxx xxx xxx
c) The public respondent erred in not finding that PD No. 1271 had legally
caused the invalidation of the Capay's property and the subsequent
validation of TRB's title over the same property was effective even as
against the Capays. 13
Meanwhile, the non-bank respondents moved for a reconsideration of the
Court of Appeals' decision. Convinced of the movants' arguments, the
Court of Appeals in a Resolution promulgated on August 10, 1994 granted
the motion for reconsideration and dismissed the complaint as against
them. The dispositive portion of the resolution states:
ACCORDINGLY, in view of the foregoing disquisitions and finding merit in
the motion for reconsideration, the same is hereby GRANTED.
Consequently, the decision of this Court, promulgated on February 24,
1994, is hereby RECONSIDERED. The complaint filed against defendantsappellants with the court a quo is hereby ordered DISMISSED, and the
certificate of titles originally issued to them in their individual names are
hereby ordered restored and duly respected. We make no pronouncement
as to costs.
SO ORDERED. 14
The Capays thus filed with this Court a petition for review, docketed as G.R.
No. 118862 to set aside the resolution of the Court of Appeals raising the
following errors:
I
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW
HOLDING THAT TUAZON VS. REYES, 48 PHIL. 814 AND RIVERA VS. MORAN,
48 PHIL. 836 ARE NOT APPLICABLE HEREOF, WHILE PINO VS. COURT OF
APPEALS, 198 SCRA 436, IS APPLICABLE.
II
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW
HOLDING THAT ATUN VS. MUNOZ, 97 PHIL. 762 AND LAROZA VS. GUIA, 134
SCRA 34, ARE NOT APPLICABLE.
III
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW
HOLDING THAT LEVIN VS. BASS, 91 PHIL. 419 VILLASOR VS. CAMON, 89
PHIL. 404 AND DIRECTOR OF LANDS VS. REYES, 68 SCRA 73, ARE NOT
APPLICABLE HEREOF.
IV
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW
HOLDING THAT PETITIONERS ARE GUILTY OF LACHES.
V
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW
HOLDING THAT THERE IS NO DISTINCTION IN THE REGISTRATION OF
VOLUNTARY INSTRUMENTS VIS-A-VIS INVOLUNTARY INSTRUMENTS.
VI

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW


HOLDING THAT RESPONDENTS WHO ARE LAWYERS, RESPONSIBLE
CITIZENS AND WELL-RESPECTED RESIDENTS IN THE COMMUNITY, ARE
EXEMPTED FROM THE EFFECTS OF THE CONSTRUCTIVE NOTICE ARISING
FROM REGISTRATION.
VII
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF WITH
REGARDS TO TRADERS ROYAL BANK, AFTER THE LATTER HAS PERFECTED
ITS APPEAL TO THE SUPREME COURT.
VIII
THE COURT OF APPEALS PALPABLY ERRED IN NOT RULING ON THE
COUNTER-ASSIGNMENT OF ERROR THAT:
B) THE LOWER COURT ERRED IN NOT HOLDING THAT DEFENDANTS ARE
BOUND BY THE DECISION IN CIVIL CASE NO. Q-10453.
Subsequently, G.R. No. 118862 was consolidated with G.R No. 114299,
pursuant to this Court's Resolution dated July 3, 1996. 15
The consolidated cases primarily involve two issues: (1) who, as between
the Capays and the non-bank respondents, has a better right to the
disputed property, and (2) whether or not TRB is liable to the Capays for
damages.
On the first issue, we rule for the non-bank respondents.
I
First, when TRB purchased the property at the foreclosure sale, the notice
of lis pendens that the Capays caused to be annotated on their certificate
of title was not carried to the new one issued to TRB. Neither did the
certificate of title of Emelita Santiago, who purchased the property from
TRB, contain any such notice. When Santiago caused the property to be
divided, six (6) new certificates of title were issued, none of which
contained any notice of lis pendens. Santiago then sold the lots to Marcial
Alcantara and his co-owners who next sold each of these to the non-bank
respondents. The non-bank respondents, therefore, could not have been
aware that the property in question was the subject of litigation when they
acquired their respective portions of said property. There was nothing in
the certificates of title or respective predecessors-in-interest that could
have aroused their suspicion. The non-bank respondents had a right to rely
on what appeared on the face of the title of their respective predecessorsin-interest, and were not bound to go beyond the same. To hold otherwise
would defeat one of the principal objects of the Torrens system of land
registration, that is, to facilitate transactions involving lands.
The main purpose of the Torrens system is to avoid possible conflicts of title
to real estate and to facilitate transactions relative thereto by giving the
public the right to rely upon the face of a Torrens certificate of title and to
dispense with the need of inquiring further, except when the party
concerned has actual knowledge of facts and circumstances that should
impel a reasonably cautious man to make such further inquiry. Where
innocent third persons, relying on the correctness of the certificate of title
thus issued, acquire rights over the property, the court cannot disregard
such rights and order the total cancellation of the certificate. The effect of
such an outright cancellation would be to impair public confidence in the
certificate of title, for everyone dealing with property registered under the
Torrens system would have to inquire in every instance as to whether the

title has been regularly or irregularly issued by the court. Every person
dealing with registered land may safely rely on the correctness of the
certificate of title issued therefor and the law will in no way oblige him to
go beyond the certificate to determine the condition of the property.
The Torrens system was adopted in this country because it was believed to
be the most effective measure to guarantee the integrity of land titles and
to protect their indefeasibility once the claim of ownership is established
and recognized. If a person purchases a piece of land on the assurance that
the seller's title thereto is valid, he should not run the risk of being told
later that his acquisition was ineffectual after all. This would not only be
unfair to him. What is worse is that if this were permitted, public
confidence in the system would be eroded and land transactions would
have to be attended by complicated and not necessarily conclusive
investigations and proof of ownership. The further consequence would be
that land conflicts could be even more numerous and complex than they
are now and possibly also more abrasive, if not even violent. The
Government, recognizing the worthy purposes of the Torrens system,
should be the first to accept the validity of titles issued thereunder once
the conditions laid down by the law are satisfied. 16
Second, the foregoing rule notwithstanding, the non-bank respondents
nevertheless physically inspected the properties and inquired from the
register of Deeds to ascertain the absence of any defect in the title of the
property they were purchasing an exercise of diligence above that
required by law.
Thus, respondent Aida Fernando Meeks, who bought Lot 5 for her son
Dean, testified:
Q How did you come to live in Baguio City, particulary in Kim. 2.5 San Luis,
Baguio City?
A In one of my visits to my sister who has been residing here for twelve
(12) years now, I got interested in buying a property here.
Q How did you come to know of this property at Asin Road where you now
reside?
A My sister, Ruth Ann Valdez, sir.
Q When this particular property was bought by you, when was that?
A I do not remember the exact date, but it was in 1984, sir.
Q At the time when you went to see the place where you now reside, how
did it look?
A This particular property that I bought was then a small one (1) room
structure, it is a two (2)-storey one (1) bedroom structure.
Q What kind of structure with regards to material?
A It is a semi-concrete structure, sir.
Q And aside from this two (2)-storey one (1)-room structure, how did the
surrounding area look like at the time you visited?
A There were stone walls from the road and there were stone walls in front
of the property and beside the property.
Q At the time you went to see the property with your agent, rather your
sister Ruth Ann Valdez did you come to know the owner?
A We did because at the time we went there, Mr. Alcantara was there
supervising the workers.
Q And who?
A Amado Cruz sir.

Q After you saw this property, what else did you do?
A My first concern then was am I buying a property with a clean title.
Q In regards to this concern of yours, did you find an answer to this
concern of yours?
A At first; I asked Mr. Alcantara and I was answered by him.
Q What was his answer?
A That it was a property with a clean title, that he has shown me the
mother title and it is a clean title.
Q Aside from being informed that it is a property with a clean title, did you
do anything to answer your question?
A Yes, sit.
Q What did you do?
A Well, the first step I did was to go to the Land Registration Office.
Q Are you referring to the City Hall of Baguio?
A Yes, the City Hall of Baguio.
Q And what did you do in the Registry of Deeds?
A We looked for the title, the original title, sir.
Q When you say we, who was your companion?
A Mr. Alcantara and my present husband, sir.
Q The three (3) of you?
A Yes, sir.
Q What title did you see there?
A We saw the title that was made up in favor of Amado Cruz, sir.
Q And what was the result of your looking up for this title in the name of
Amado Cruz?
A We had to be reassured that it was a genuine one, so we asked Atty.
Diomampo who heads the office. We showed him a copy of that title and
we were also reassured by him that anything that was signed by him was
as good as it is.
Q Did this Atty. Diomampo reassure you that the title was good?
A He did.
Q After your conversation with the Register of Deeds, what did you do?
A The second step we did was to confer with our lawyer, a friend from
RCBC Binondo, Manila this is Atty. Nelson Waje.
Q What is your purpose in going to this lawyer?
A We wanted an assurance that we were getting a valid title just in case we
think of buying the property.
Q What was the result of your conference with this lawyer?
A He was absolutely certain that was a valid title.
Q Mrs. Meeks, after looking at the place, going to the Register of Deeds,
looking at the title and seeing your lawyer friend, what decision did you
finally make regarding the property?
A We wanted more reassurances, so we proceeded to Banaue, as advised
by that same lawyer, there is another office of the Bureau of Lands. I
cannot recall the office but it has something to do with registration of the
old.
Q What is your purpose in going to this Office in Banaue?
A I wanted more reassuances that I was getting a valid title.
Q What was the result of your visit to the Banaue Office?
A We found the title of this property and there was reassurance that it was
a clean title and we saw the mother title under the Hilario family.

Q Mrs. Meeks, when you say Banaue, what particular place is this Banaue?
A It is in Banaue Street in Quezon City, sir.
Q And when you saw the title to this property and the mother title, what
was the result of your investigation, the investigation that you made?
A We were reassured that we were purchasing a valid title, we had a
genuine title.
Q When you were able to determine that you had a valid, authentic or
genuine title, what did you do?
A That is when I finally thought of purchasing the property. 17
Telesforo Alfelor II, the purchaser of Lot 4, narrated going through a similar
routine:
Q How did you come to know of this place as Asin Road where you are
presently residing?
A It was actually through Mrs. Flory Recto who is presently the Branch
Manager of CocoBank. She informed my wife that there is a property for
sale at Asin Road, and she was the one who introduced to us Mr. Alcantara,
sir.
Q When you were informed by Mrs. Recto and when you met with Mr.
Alcantara, did you see the property that was being offered for sale?
A Yes, sir.
Q When did you specifically see the property, if you can recall?
A I would say it is around the third quarter of 1983, sir.
Q When you went to see the place, could you please describe what you
saw at that time?
A When we went there the area is still being developed by Mr. Alcantara. As
a matter of fact the road leading to the property is still not passable
considering that during that time it was rainy season and it was muddy, we
fell on our way going to the property and walked to have an ocular
inspection and physical check on the area, sir.
xxx xxx xxx
Q What was the improvement, if any, that was in that parcel which you are
going to purchase?
A During that time, the riprap of the property is already there, the one-half
of the riprap sir.
Q Do you know who was making this improvement at the time that you
went there?
A I would understand that it was Marcial Alcantara, sir.
Q After you saw the place riprap and you were in the course of deciding to
purchase this property, what else did you do?
A First, I have to consider that the property is clean.
Q How did you go about determining whether the title of the property is
clean?
A Considering that Marcial Alcantara is a real estate broker, I went to his
office and checked the documents he has regarding the property.
Q And what was the result of your checking as to whether the title of the
property is clean?
A He showed me the copy of the title and it was clean, sir.
Q Aside from going to Mr. Alcantara to check up the title of the property,
what else did you do?
A Well, the next thing is I requested his wife to accompany me to the
Bureau of Lands or rather the Registry of Deeds, sir.

Q What registry of Deeds are you referring to?


A The Registry of Deeds of Baguio City, sir.
Q And were you able to see the Register of Deeds regarding what you
would like to know?
A Yes, and we were given a certification regarding this particular area that
it was clean, sir.
Q What Certification are you referring to?
A It is a Certification duly signed by the employee of the Registry of Deeds
Adelina Tabangin, sir.
Q Do you have a copy of that Certification?
A Yes, I have, sir. 18
The testimonies of Honorato Santos 19 and Josefina Pe 20 were to the same
effect.
The non-bank respondent predecessor-in-interest, Marcial Alcantara, was
less thorough:
Q And will you give a brief description of what you do?
A I normally acquire land, quite big tract of land and subdivide it into
smaller lots and sold it to some interested parties.
Q Specifically, Mr. Alcantara will you please inform the Court in what place
in Baguio have you acquired and subdivided and sold lots?
A Dominican Hill, Leonila Hill, Cristal Cave and Asin Road, sir.
Q You mentioned Asin Road, what particular place in Asin Road are you
referring?
A That property I bought from Emelita Santiago, sir.
Q When you say you bought it from Emelita Santiago, how did you come to
know that Emelita Santiago is disposing of the property?
A Because of the father, he is the one who offered me the property, sir,
Armando Gabriel.
Q Is he also a resident of Baguio?
A He is from Buyagan, La Trinidad sir,
Q How did you come to know of this Armando Gabriel wanting to sell a
property in Asin?
A He approached me in the house, sir. He has acquired a title from the
Traders Royal Bank.
Q Can you inform the Honorable Court when you had this conversation with
Armando Gabriel on the sale of the property at Asin Road?
A Later part of March, 1983, sir.
Q Now, when this Armando Gabriel informed you that he wants his property
to be sold, what did you do?
A I went to the place with the agent, sir.
Q When you say you went to the place with the agent, what place?
A Kilometer 2, Asin Road sir.
Q And when you went there to see the place, did you actually go there to
see the place?
A By walking, I parked my car a kilometer away, sir.
Q Is it my understanding that when you went to see the property there
were no roads?
A None, sir.
xxx xxx xxx

Q Mr. Alcantara, when you went to see this place at Asin Road last week of
March, 1983, will you please briefly describe how this place looked like at
that time?
A The place was mountainous, grassy, there were cogon trees, some of the
roads were eroding already, so we cannot possibly enter the property, sir.
Q At the time you entered the place, was there any visible sign of claim by
anyone?
A None, sir.
Q In terms of fence in the area?
A There is no such, sir.
xxx xxx xxx
Q Aside from looking or going to the property, what else did you do to this
property prior to your purchase?
A I investigated it with the Register of Deeds, sir.
Q What is your purpose in investigating it with the Register of Deeds?
A To see if the paper in clean and there are no encumbrances, sir.
Q To whom did you talk?
A To Atty. Ernesto Diomampo, sir.
Q And when you went to the Registry of Deeds to investigate and check,
did you have occasion to talk with Atty. Diomampo?
A Yes, sir.
Q And what was the result of your talk with Atty. Diomampo?
A The papers are clean except to the annotation at the back with the road
right of way, sir.
Q After making this investigation with the Register of Deeds and talking
with Atty. Diomampo, what else transpired?
A We bought the property, sir.
Q After purchasing the property from Emelita Santiago, could you please
tell the Honorable Court what you did with that deed of sale?
A We registered it with the Register of Deeds for the Certificate of Title
because at that time when we bought the property, Emelita Santiago had it
subdivided into six (6) lots, sir.
Q Is it our understanding that prior to your purchase the property was
subdivided into six (6) parcels?
A Yes, sir.
Q Could you please inform the Honorable Court if you have any buyers in
the subdivision of this property prior to your purchase?
A Yes, I have.
Q This subdivision of this property, to what office was it brought for action?
A Bureau of Lands, San Fernando, La Union, sir.
Q Now, Mr. Alcantara, at the time that you had this property subdivided by
the owner, could you please inform the Court if there was any claim by any
other party opposing the subdivision or claiming the property?
A None, sir.
Q When the Deed of Sale was executed and you said that you presented it
to the Register of Deeds and after the subdivision already, what action did
the Register of Deeds have regarding the matter?
A They approved it and registered it already in six (6) titles, sir.
Q In whose names?
A One (1) title under my name, Amado Cruz and Dr. Sanchez, sir.

Q Initially, Mr. Alcantara, you said that you are the sole purchaser of this
entire area of One Thousand Five Hundred Ninety One (1,591) Square
Meters. Now, you are informing this Honorable Court that one Amado Cruz
and one Dr. Sanchez were also issued two (2) titles. Could you explain how
these titles came into their possession?
A Actually, two (2) are our co-owners, sir.
Q So, is it our understanding that the Deed of Sale from Emelita Santiago is
in favor of these two (2) Atty. Cruz and Dr. Sanchez?
A Yes, sir. 21
Third, between two innocent persons, the one who made it possible for the
wrong to be done should be the one to bear the resulting loss. 22 The
Capays filed the notice of lis pendens way back on March 17, 1967 but the
same was not TRB's title. The Capays and their counsel Atty. Ramon A.
Gonzales knew in 1968 of the extra-judicial foreclosure sale of the property
to TRB and the consolidation of title in the bank's name following the lapse
of the one-year period of redemption. But in the next fifteen (15) years or
so, they did not bother to find out the status of their title or whether the
liens noted on the original certificate of title were still existing considering
that the property had already been foreclosed. In the meantime, the
subject property had undergone a series of transfers to buyers in good and
for value. It was not until after the land was subdivided and developed with
the buyers building their houses on the other lots when the Capays
suddenly appeared and questioned the occupants' titles. At the very least,
the Capays are guilty of laches. Laches has been defined as the failure or
neglect, for an unreasonable and unexplained length of time, to do that
which by exercising due diligence could nor should have been done earlier;
it is negligence or omission to assert a right within a reasonable time,
warranting presumption that the party entitled to it either has abandoned it
or declined to assert it. 23
Verily, the principle on prescription of actions is designed to cover
situations such as the case at bar, where there have been a series of
transfers to innocent purchasers for value. To set aside these transactions
only to accommodate a party who has slept on his rights is anathema to
good order.
Independently of the principle of prescription of actions working against
petitioners, the doctrine of laches may further be counted against them,
which latter tenet finds application even to imprescriptible
actions. . . . 24
In De La Calzada-Cierras vs. Court of Appeals, 25 we held:
While it is true that under the law it is the act of registration of the deed of
conveyance that serves as the operative act to convey the land registered
under the Torrens System (Davao Grains, Inc. vs. Intermediate Appellate
Court, 171 SCRA 612), the petitioners cannot invoke said dictum because
their action to recover Lot 4362 is barred by the equitable doctrine of
laches.
The act of registering the conveyance to Rosendo was constructive notice
to the whole world of the fact of such conveyance (Heirs of Maria
Marasigan vs. Intermediate Appellate Court, 152 SCRA 253).
But the petitioners' complaint to recover the title and possession of Lot
4362 was filed only on July 21, 1981, twelve (12) years after the
registration of the sale to Rosendo. The petitioners failed and neglected for

an unreasonably long time to assert their right, if any, to the property in


Rosendo's possession.
Being guilty of laches, the Capays cannot invoke the ruling in Villasor vs.
Camon Levin Bass and Director of Lands vs. Reyes 26 to the effect that
entry of the notice of lis pendens in the day book (primary entry book) is
sufficient to constitute registration and such entry is notice to all persons of
such adverse claim. Certainly, it is most iniquitous for the Capays who,
after sleeping on their rights for fifteen years to assert ownership over the
property that has undergone several transfers made in good faith and for
value and already subdivided into several lots with improvements
introduced thereon by their owners.
In the same vein, the cases cited by the Capays in their first two (2)
assignment of errors, do not help them any, as the transferees in said
cases were not innocent purchasers for value and in good faith. In Tuazon
vs. Reyes andSiochi, 27 where the land involved therein was sold by
Petronilo David to Vicente Tuazon, it was with a deed containing the recital
that the land was in dispute between the vendor and Roberto Siochi.
Tuazon, who was merely subrogated to the rights of the vendor was aware
of the dispute and, furthermore, David did not warrant the title to the
same. In Rivera vs. Moran, 28 Rivera acquired interest in the land before the
final decree was entered in the cadastral proceedings. Rivera, the
transferee, was aware of the pending litigation and, consequently, could
not have been considered a purchaser in good faith. Similarly, in Atun, et
al. vs. Nuez, et al. 29 and Laroza vs. Guia, 30 the buyers of the property at
the time of their acquisition knew of the existence of the notice of lis
pendens. In contrast to the cited cases, the non-bank respondents in the
case at bar acquired their respective portions of the land with clean title
from their predecessors-in-interest.
II
We come now to TRB's liability towards the Capays.
The Bank unconvincingly tries to wash its hands off the present
controversy, and attempts to shift the blame on the Capays, thus:
xxx xxx xxx
23. The petitioner Bank, during all the time that it was holding the title for
over fourteen (14) years that there was no legal impediment for it to sell
said property, Central Bank regulations require that real properties of
banks should not he held for more than five (5) years:
24. The fault of the Register of Deeds in not carrying over the Notice of Lis
Pendens to the new title of the petitioner Bank should not be absorbed by
the latter considering that in all good faith, it was not aware of the
existence of said annotation during all the time that said title was in its
possession for almost fourteen (14) years before the property was sold to
Emelita G. Santiago. . . . 31
TRB concludes that "(t)he inaction and negligence of private respondents
allowing ownership to pass for almost 15 years constitute prescription of
action and/or laches." 32
Sec. 25 of the General Banking Act, 33 provides that no bank "shall hold the
possession of any real estate under mortgage or trust, deed, or the title
and possession of any real estate purchased to secure any debt due to it,
for a longer period than five years." TRB, however, admits hoding on to the
foreclosed property for twelve (12) years after consolidating title in its

name. The bank is, therefore, estopped from involving banking laws and
regulations to justify its belated disposition of the property. It cannot be
allowed to hide behind the law which it itself violated.
TRB cannot feign ignorance of the existence of the lis pendens because
when the property was foreclosed by it, the notice of lis pendens was
annotated on the title. But when TCT No. T-6595 in the name of the Capay
spouses was cancelled after the foreclosure, TCT No. T-16272 which was
issued in place thereof in the name of TRB did not carry over the notice of
lis pendens.
We do not find the Capays guilty of "inaction and negligence" as against
TRB. It may be recalled that upon the commencement of foreclosure
proceedings by TRB, the Capays filed an action for prohibition on
September 22, 1966 against the TRB before the CFI to stop the foreclosure
sale. Failing in that attempt, the Capays filed a supplemental complaint for
the recovery of the property. The case reached this Court. Prescription or
laches could not have worked against the Capays because they had
persistently pursued their suit against TRB to recover their property.
On the other hand, it is difficult to believe TRB's assertion that after holding
on to the property for more than ten (10) years, it suddenly realized that it
was acting in violation of the General Bank Act. What is apparent is that
TRB took advantage of the absence of the notice of lis pendens at the back
of their certificate of title and sold the property to an unwary purchaser.
This notwithstanding the adverse decision of the trial court and the
pendency of its appeal. TRB, whose timing indeed smacks of bad faith, thus
transferred caused the property without the lis pendens annotated on its
title to put it beyond the Capays' reach. Clearly, the bank acted in a
manner contrary to morals, good customs and public policy and should be
held liable for damages. 34
Considering however, that the mortgage in favor of TRB had been declared
null and void for want of consideration and, consequently, the foreclosure
proceedings did not have a valid effect, the Capays would ordinarily be
entitled to the recovery of their property. Nevertheless, this remedy is not
now available to the Capays inasmuch as title to said property has passed
into the hands of third parties who acquired the same in good faith and for
value. Such being the case, TRB is duty bound to pay the Capays the fair
market value of the property at the time it was sold to Emelita Santiago,
the transferee of TRB.
WHEREFORE, the Decision of the Court of Appeals dated Frebruary 24,
1994 in CA-G.R. CV No. 33920, as modified by its Resolution dated August
10, 1994 is hereby AFFIRMED. In addition, Traders Royal Bank is ordered to
pay the Capays the fair market value of the property at the time it was sold
to Emelita Santiago.
This Decision is without prejudice to whatever criminal, civil or
administrative action against the Register of Deeds and or his assistants
that may be taken by the party or parties prejudiced by the failure of the
former to carry over the notice of lis pendens to the certificate of title in
the name of TRB.1wphi1.nt
SO ORDERED.
G.R. No. 164687
February 12, 2009
SM PRIME HOLDINGS, INC., Petitioner,

vs.
ANGELA V. MADAYAG, Respondent.
DECISION
NACHURA, J.:
This is a petition for review on certiorari of the Decision 1 of the Court of
Appeals (CA) dated March 19, 2004 and Resolution dated July 15, 2004,
which set aside the lower courts order to suspend the proceedings on
respondents application for land registration.
On July 12, 2001, respondent Angela V. Madayag filed with the Regional
Trial Court (RTC) of Urdaneta, Pangasinan an application for registration of a
parcel of land with an area of 1,492 square meters located in Barangay
Anonas, Urdaneta City, Pangasinan. 2 Attached to the application was a
tracing cloth of Survey Plan Psu-01-008438, approved by the Land
Management Services (LMS) of the Department of Environment and Natural
Resources (DENR), Region 1, San Fernando City.
On August 20, 2001, petitioner SM Prime Holdings, Inc., through counsel,
wrote the Chief, Regional Survey Division, DENR, Region I, demanding the
cancellation of the respondents survey plan because the lot encroached on
the properties it recently purchased from several lot owners and that,
despite being the new owner of the adjoining lots, it was not notified of the
survey conducted on June 8, 2001.3
Petitioner then manifested its opposition to the respondents application for
registration. The Republic of the Philippines, through the Office of the
Solicitor General, and the heirs of Romulo Visperas also filed their
respective oppositions.
On February 6, 2002, petitioner filed its formal opposition. Petitioner
alleged that it had recently bought seven parcels of land in Barangay
Anonas, Urdaneta, delineated as Lots B, C, D, E, G, H and I in ConsolidationSubdivision Plan No. (LRC) Pcs-21329, approved by the Land Registration
Commission on August 26, 1976, and previously covered by Survey Plan
No. Psu-236090 approved by the Bureau of Lands on December 29, 1970.
These parcels of land are covered by separate certificates of title, some of
which are already in the name of the petitioner while the others are still in
the name of the previous owners.
On February 20, 2002, the RTC declared a general default, except as to the
petitioner, the Republic, and the heirs of Romulo Visperas. Thereafter,
respondent commenced the presentation of evidence.
Meanwhile, acting on petitioners request for the cancellation of the
respondents survey plan, DENR Assistant Regional Executive Director for
Legal Services and Public Affairs, Allan V. Barcena, advised the petitioner to
file a petition for cancellation in due form so that the DENR could properly
act on the same.4 Accordingly, petitioner formally filed with the DENR a
petition5 for cancellation of the survey plan sometime in March 2002,
alleging the following grounds:
I.
THERE IS NO SUCH THING AS ALIENABLE OR DISPOSABLE PROPERTY
WHICH IS THE SUBJECT LOT IN THIS CASE
II.
NO NOTICE WAS MADE UPON PETITIONER (AS ADJOINING LANDOWNER AND
WHO BEARS INTEREST OVER THE SUBJECT LOT) MUCH LESS THE OWNERS
OF ADJOINING LANDS.

III.
THE CIRCUMSTANCES EVIDENTLY SHOW THAT BAD FAITH AND/OR MALICE
ATTENDED THE APPROVAL OF (PLAN WITH PSU NO. 01-008438). 6
On July 17, 2002, petitioner filed an Urgent Motion to Suspend Proceedings 7
in the land registration case, alleging that the court should await the DENR
resolution of the petition for the cancellation of the survey plan "as the
administrative case is prejudicial to the determination" of the land
registration case.
On October 8, 2002, the RTC issued an Order granting the motion, thus:
WHEREFORE, PREMISES CONSIDERED, the Court hereby GRANTS the
instant motion and suspends the proceedings herein. In the meantime, and
until receipt by this Court of a copy of the resolution of the petition for
cancellation by the DENR, the instant case is hereby ARCHIVED.
SO ORDERED.8
Emphasizing that a survey plan is one of the mandatory requirements in
land registration proceedings, the RTC agreed with the petitioner that the
cancellation of the survey plan would be prejudicial to the petition for land
registration.9
On February 13, 2003, the RTC denied the respondents motion for
reconsideration of its order. 10 Respondent thereafter filed a petition for
certiorari with the CA assailing the order suspending the proceedings.
On March 19, 2004, finding that the RTC committed grave abuse of
discretion in suspending the proceedings, the CA granted the petition for
certiorari, thus:
WHEREFORE, premises considered, the instant petition is hereby GRANTED.
The challenged Orders dated October 8, 2002 and February 13, 2003 of the
respondent Court are declared NULL and VOID.
The Court a quo is directed to continue the proceedings until its final
determination. No pronouncement as to costs.
SO ORDERED.11
The CA ratiocinated that the survey plan which was duly approved by the
DENR should be accorded the presumption of regularity, and that the RTC
has the power to hear and determine all questions arising from an
application for registration.12
On July 15, 2004, the CA issued a Resolution 13 denying the petitioners
motion for reconsideration. Petitioner was, thus, compelled to file this
petition for review, ascribing the following errors to the CA:
I. THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN NOT FINDING
THAT THE SUSPENSION OF THE PROCEEDINGS IN THE LAND REGISTRATION
CASE IS LEGAL AND PROPER PENDING THE DETERMINATION AND
RESOLUTION OF THE ADMINISTRATIVE CASE BEFORE THE DEPARTMENT OF
ENVIRONMENT AND NATURAL RESOURCES-REGION 1.
II. THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO
FIND THAT THE ASSAILED ORDERS OF THE LOWER COURT HAVE PROPER
AND SUFFICIENT BASES IN FACT AND IN LAW.
III. THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN HOLDING
THAT THE LOWER COURT HAS ACTED WITH GRAVE ABUSE OF DISCRETION
IN SUSPENDING THE PROCEEDINGS AND ARCHIVING THE CASE.
IV. THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO
FIND THAT THE FILING OF THE PETITION FOR CERTIORARI, UNDER RULE 65
OF THE REVISED RULES OF CIVIL PROCEDURE, IS NOT THE ONLY PLAIN,

SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW ON


THE PART OF HEREIN RESPONDENT.14
The petition has no merit.
Petitioner contends that, since the respondents cause of action in the land
registration case depends heavily on the survey plan, it was only prudent
for the RTC to suspend the proceedings therein pending the resolution of
the petition for cancellation of the survey plan by the DENR. 15 It, therefore,
insists that recourse to a petition for certiorari was not proper considering
that respondent was not arbitrarily deprived of her right to prosecute her
application for registration.16
Undeniably, the power to stay proceedings is an incident to the power
inherent in every court to control the disposition of the cases in its dockets,
with economy of time and effort for the court, counsel and litigants. But
courts should be mindful of the right of every party to a speedy disposition
of his case and, thus, should not be too eager to suspend proceedings of
the cases before them. Hence, every order suspending proceedings must
be guided by the following precepts: it shall be done in order to avoid
multiplicity of suits and prevent vexatious litigations, conflicting judgments,
confusion between litigants and courts,17 or when the rights of parties to
the second action cannot be properly determined until the questions raised
in the first action are settled. 18 Otherwise, the suspension will be regarded
as an arbitrary exercise of the courts discretion and can be corrected only
by a petition for certiorari.
None of the circumstances that would justify the stay of proceedings is
present. In fact, to await the resolution of the petition for cancellation
would only delay the resolution of the land registration case and undermine
the purpose of land registration.
The fundamental purpose of the Land Registration Law (Presidential Decree
No. 1529) is to finally settle title to real property in order to preempt any
question on the legality of the title except claims that were noted on the
certificate itself at the time of registration or those that arose subsequent
thereto.1avvphi1 Consequently, once the title is registered under the said
law, owners can rest secure on their ownership and possession. 19
Glaringly, the petition for cancellation raises practically the very same
issues that the herein petitioner raised in its opposition to the respondents
application for registration. Principally, it alleges that the survey plan
should be cancelled because it includes portions of the seven properties
that it purchased from several landowners, which properties are already
covered by existing certificates of title.
Petitioner posits that it is the DENR that has the sole authority to decide
the validity of the survey plan that was approved by the LMS. 20 It cites
Section 4(15), Chapter 1, Title XIV, Administrative Code of 1987 which
provides that the DENR shall
(15) Exercise (of) exclusive jurisdiction on the management and disposition
of all lands of the public domain and serve as the sole agency responsible
for classification, sub-classification, surveying and titling of lands in
consultation with appropriate agencies.
However, respondent argues that the land registration court is clothed with
adequate authority to resolve the conflicting claims of the parties, and that
even if the DENR cancels her survey plan, the land registration court is not

by duty bound to dismiss the application for registration based solely on


the cancellation of the survey plan.21lawphil.net
Without delving into the jurisdiction of the DENR to resolve the petition for
cancellation, we hold that, as an incident to its authority to settle all
questions over the title of the subject property, the land registration court
may resolve the underlying issue of whether the subject property overlaps
the petitioners properties without necessarily having to declare the survey
plan as void.
It is well to note at this point that, in its bid to avoid multiplicity of suits and
to promote the expeditious resolution of cases, Presidential Decree (P.D.)
No. 1529 eliminated the distinction between the general jurisdiction vested
in the RTC and the latters limited jurisdiction when acting merely as a land
registration court. Land registration courts, as such, can now hear and
decide even controversial and contentious cases, as well as those involving
substantial issues.22 When the law confers jurisdiction upon a court, the
latter is deemed to have all the necessary powers to exercise such
jurisdiction to make it effective. 23 It may, therefore, hear and determine all
questions that arise from a petition for registration.
In view of the nature of a Torrens title, a land registration court has the
duty to determine whether the issuance of a new certificate of title will
alter a valid and existing certificate of title. 24 An application for registration
of an already titled land constitutes a collateral attack on the existing title,
25
which is not allowed by law. 26 But the RTC need not wait for the decision
of the DENR in the petition to cancel the survey plan in order to determine
whether the subject property is already titled or forms part of already titled
property. The court may now verify this allegation based on the
respondents survey plan vis--vis the certificates of title of the petitioner
and its predecessors-in-interest. After all, a survey plan precisely serves to
establish the true identity of the land to ensure that it does not overlap a
parcel of land or a portion thereof already covered by a previous land
registration, and to forestall the possibility that it will be overlapped by a
subsequent registration of any adjoining land.27
Should the court find it difficult to do so, the court may require the filing of
additional papers to aid in its determination of the propriety of the
application, based on Section 21 of P.D. No. 1529:
SEC. 21. Requirement of additional facts and papers; ocular inspection.
The court may require facts to be stated in the application in addition to
those prescribed by this Decree not inconsistent therewith and may require
the filing of any additional papers.
The court may also directly require the DENR and the Land Registration
Authority to submit a report on whether the subject property has already
been registered and covered by certificates of title, like what the court did
in Carvajal v. Court of Appeals. 28 In that case, we commended such move
by
the land registration court for being "in accordance with the purposes of
the Land Registration Law."29
WHEREFORE, premises considered, the petition is DENIED. The Court of
Appeals Decision dated March 19, 2004 and Resolution dated July 15, 2004
are AFFIRMED. The Regional Trial Court of Urdaneta, Pangasinan is
DIRECTED to continue with the proceedings in L.R.C. Case No. U-1134 and
to resolve the same with dispatch.

SO ORDERED.

G.R. No. 159310


February 24, 2009
CAMILO F. BORROMEO, Petitioner,
vs.
ANTONIETTA O. DESCALLAR, Respondent.
DECISION
PUNO, C.J.:
What are the rights of an alien (and his successor-in-interest) who acquired
real properties in the country as against his former Filipina girlfriend in
whose sole name the properties were registered under the Torrens system?
The facts are as follows:
Wilhelm Jambrich, an Austrian, arrived in the Philippines in 1983 after he
was assigned by his employer, Simmering-Graz Panker A.G., an Austrian
company, to work at a project in Mindoro. In 1984, he transferred to Cebu
and worked at the Naga II Project of the National Power Corporation. There,
he met respondent Antonietta Opalla-Descallar, a separated mother of two
boys who was working as a waitress at St. Moritz Hotel. Jambrich
befriended respondent and asked her to tutor him in English. In dire need
of additional income to support her children, respondent agreed. The
tutorials were held in Antoniettas residence at a squatters area in Gorordo
Avenue.
Jambrich and respondent fell in love and decided to live together in a
rented house in Hernan Cortes, Mandaue City. Later, they transferred to
their own house and lots at Agro-Macro Subdivision, Cabancalan, Mandaue
City. In the Contracts to Sell dated November 18, 1985 1 and March 10,
19862 covering the properties, Jambrich and respondent were referred to as
the buyers. A Deed of Absolute Sale dated November 16, 1987 3 was
likewise issued in their favor. However, when the Deed of Absolute Sale
was presented for registration before the Register of Deeds, registration
was refused on the ground that Jambrich was an alien and could not
acquire alienable lands of the public domain. Consequently, Jambrichs
name was erased from the document. But it could be noted that his
signature remained on the left hand margin of page 1, beside respondents
signature as buyer on page 3, and at the bottom of page 4 which is the last
page. Transfer Certificate of Title (TCT) Nos. 24790, 24791 and 24792 over
the properties were issued in respondents name alone.
Jambrich also formally adopted respondents two sons in Sp. Proc. No. 39MAN,4 and per Decision of the Regional Trial Court of Mandaue City dated
May 5, 1988.5
However, the idyll lasted only until April 1991. By then, respondent found a
new boyfriend while Jambrich began to live with another woman in Danao
City. Jambrich supported respondents sons for only two months after the
break up.

Jambrich met petitioner Camilo F. Borromeo sometime in 1986. Petitioner


was engaged in the real estate business. He also built and repaired
speedboats as a hobby. In 1989, Jambrich purchased an engine and some
accessories for his boat from petitioner, for which he became indebted to
the latter for about P150,000.00. To pay for his debt, he sold his rights and
interests in the Agro-Macro properties to petitioner for P250,000, as
evidenced by a "Deed of Absolute Sale/Assignment." 6 On July 26, 1991,
when petitioner sought to register the deed of assignment, he discovered
that titles to the three lots have been transferred in the name of
respondent, and that the subject property has already been mortgaged.
On August 2, 1991, petitioner filed a complaint against respondent for
recovery of real property before the Regional Trial Court of Mandaue City.
Petitioner alleged that the Contracts to Sell dated November 18, 1985 and
March 10, 1986 and the Deed of Absolute Sale dated November 16, 1987
over the properties which identified both Jambrich and respondent as
buyers do not reflect the true agreement of the parties since respondent
did not pay a single centavo of the purchase price and was not in fact a
buyer; that it was Jambrich alone who paid for the properties using his
exclusive funds; that Jambrich was the real and absolute owner of the
properties; and, that petitioner acquired absolute ownership by virtue of
the Deed of Absolute Sale/Assignment dated July 11, 1991 which Jambrich
executed in his favor.
In her Answer, respondent belied the allegation that she did not pay a
single centavo of the purchase price. On the contrary, she claimed that she
"solely and exclusively used her own personal funds to defray and pay for
the purchase price of the subject lots in question," and that Jambrich, being
an alien, was prohibited to acquire or own real property in the Philippines.
At the trial, respondent presented evidence showing her alleged financial
capacity to buy the disputed property with money from a supposed copra
business. Petitioner, in turn, presented Jambrich as his witness and
documentary evidence showing the substantial salaries which Jambrich
received while still employed by the Austrian company, Simmering-Graz
Panker A.G.
In its decision, the court a quo found
Evidence on hand clearly show that at the time of the purchase and
acquisition of [the] properties under litigation that Wilhelm Jambrich was
still working and earning much. This fact of Jambrich earning much is not
only supported by documentary evidence but also by the admission made
by the defendant Antoniet[t]a Opalla. So that, Jambrichs financial capacity
to acquire and purchase the properties . . . is not disputed. 7
xxx
On the other hand, evidence . . . clearly show that before defendant met
Jambrich sometime in the latter part of 1984, she was only working as a
waitress at the St. Moritz Hotel with an income of P1,000.00 a month and
was . . . renting and living only in . . . [a] room at . . . [a] squatter area at
Gorordo Ave., Cebu City; that Jambrich took pity of her and the situation of
her children that he offered her a better life which she readily accepted. In
fact, this miserable financial situation of hers and her two children . . . are
all stated and reflected in the Child Study Report dated April 20, 1983
(Exhs. "G" and "G-1") which facts she supplied to the Social Worker who
prepared the same when she was personally interviewed by her in

connection with the adoption of her two children by Wilhelm Jambrich. So


that, if such facts were not true because these are now denied by her . . .
and if it was also true that during this time she was already earning as
much as P8,000.00 to P9,000.00 as profit per month from her copra
business, it would be highly unbelievable and impossible for her to be living
only in such a miserable condition since it is the observation of this Court
that she is not only an extravagant but also an expensive person and not
thrifty as she wanted to impress this Court in order to have a big saving as
clearly shown by her actuation when she was already cohabiting and living
with Jambrich that according to her . . . the allowance given . . . by him in
the amount of $500.00 a month is not enough to maintain the education
and maintenance of her children.8
This being the case, it is highly improbable and impossible that she could
acquire the properties under litigation or could contribute any amount for
their acquisition which according to her is worth more than P700,000.00
when while she was working as [a] waitress at St. Moritz Hotel earning
P1,000.00 a month as salary and tips of more or less P2,000.00 she could
not even provide [for] the daily needs of her family so much so that it is
safe to conclude that she was really in financial distress when she met and
accepted the offer of Jambrich to come and live with him because that was
a big financial opportunity for her and her children who were already
abandoned by her husband.9
xxx
The only probable and possible reason why her name appeared and was
included in [the contracts to sell dated November 18, 1985 and March 10,
1986 and finally, the deed of absolute sale dated November 16, 1987] as
buyer is because as observed by the Court, she being a scheming and
exploitive woman, she has taken advantage of the goodness of Jambrich
who at that time was still bewitched by her beauty, sweetness, and good
attitude shown by her to him since he could still very well provide for
everything she needs, he being earning (sic) much yet at that time. In fact,
as observed by this Court, the acquisition of these properties under
litigation was at the time when their relationship was still going smoothly
and harmoniously.10 [Emphasis supplied.]
The dispositive portion of the Decision states:
WHEREFORE, . . . Decision is hereby rendered in favor of the plaintiff and
against the defendant Antoniet[t]a Opalla by:
1) Declaring plaintiff as the owner in fee simple over the residential house
of strong materials and three parcels of land designated as Lot Nos. 1, 3
and 5 which are covered by TCT Nos. 24790, 24791 and 24792 issued by
the Register of Deeds of Mandaue City;
2) Declaring as null and void TCT Nos. 24790, 24791 and 24792 issued in
the name of defendant Antoniet[t]a Descallar by the Register of Deeds of
Mandaue City;
3) Ordering the Register of Deeds of Mandaue City to cancel TCT Nos.
24790, 24791 and 24792 in the name of defendant Antoniet[t]a Descallar
and to issue new ones in the name of plaintiff Camilo F. Borromeo;
4) Declaring the contracts now marked as Exhibits "I," "K" and "L" as
avoided insofar as they appear to convey rights and interests over the
properties in question to the defendant Antoniet[t]a Descallar;

5) Ordering the defendant to pay plaintiff attorneys fees in the amount of


P25,000.00 and litigation expenses in the amount of P10,000.00; and,
6) To pay the costs.11
Respondent appealed to the Court of Appeals. In a Decision dated April 10,
2002,12 the appellate court reversed the decision of the trial court. In ruling
for the respondent, the Court of Appeals held:
We disagree with the lower courts conclusion. The circumstances involved
in the case cited by the lower court and similar cases decided on by the
Supreme Court which upheld the validity of the title of the subsequent
Filipino purchasers are absent in the case at bar. It should be noted that in
said cases, the title to the subject property has been issued in the name of
the alien transferee (Godinez et al., vs. Fong Pak Luen et al., 120 SCRA 223
citing Krivenko vs. Register of Deeds of Manila, 79 Phils. 461; United
Church Board for World Ministries vs. Sebastian, 159 SCRA 446, citing the
case of Sarsosa Vda. De Barsobia vs. Cuenco, 113 SCRA 547; Tejido vs.
Zamacoma, 138 SCRA 78). In the case at bar, the title of the subject
property is not in the name of Jambrich but in the name of defendantappellant. Thus, Jambrich could not have transferred a property he has no
title thereto.13
Petitioners motion for reconsideration was denied.
Hence, this petition for review.
Petitioner assigns the following errors:
I. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
DISREGARDING RESPONDENTS JUDICIAL ADMISSION AND OTHER
OVERWHELMING EVIDENCE ESTABLISHING JAMBRICHS PARTICIPATION,
INTEREST AND OWNERSHIP OF THE PROPERTIES IN QUESTION AS FOUND
BY THE HONORABLE TRIAL COURT.
II. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING
THAT JAMBRICH HAS NO TITLE TO THE PROPERTIES IN QUESTION AND MAY
NOT THEREFORE TRANSFER AND ASSIGN ANY RIGHTS AND INTERESTS IN
FAVOR OF PETITIONER.
III. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN REVERSING
THE WELL-REASONED DECISION OF THE TRIAL COURT AND IN IMPOSING
DOUBLE COSTS AGAINST HEREIN PETITIONER (THEN, PLAINTIFFAPPELLEE).14
First, who purchased the subject properties?
The evidence clearly shows, as pointed out by the trial court, who between
respondent and Jambrich possesses the financial capacity to acquire the
properties in dispute. At the time of the acquisition of the properties in
1985 to 1986, Jambrich was gainfully employed at Simmering-Graz Panker
A.G., an Austrian company. He was earning an estimated monthly salary of
P50,000.00. Then, Jambrich was assigned to Syria for almost one year
where his monthly salary was approximately P90,000.00.
On the other hand, respondent was employed as a waitress from 1984 to
1985 with a monthly salary of not more than P1,000.00. In 1986, when the
parcels of land were acquired, she was unemployed, as admitted by her
during the pre-trial conference. Her allegations of income from a copra
business were unsubstantiated. The supposed copra business was actually
the business of her mother and their family, with ten siblings. She has no
license to sell copra, and had not filed any income tax return. All the
motorized bancas of her mother were lost to fire, and the last one left

standing was already scrap. Further, the Child Study Report 15 submitted by
the Department of Social Welfare and Development (DSWD) in the
adoption proceedings of respondents two sons by Jambrich disclosed that:
Antonietta tried all types of job to support the children until she was
accepted as a waitress at St. Moritz Restaurant in 1984. At first she had no
problem with money because most of the customers of St. Moritz are (sic)
foreigners and they gave good tips but towards the end of 1984 there were
no more foreigners coming because of the situation in the Philippines at
that time. Her financial problem started then. She was even renting a small
room in a squatters area in Gorordo Ave., Cebu City. It was during her time
of great financial distress that she met Wilhelm Jambrich who later offered
her a decent place for herself and her children. 16
The DSWD Home Study Report17 further disclosed that:
[Jambrich] was then at the Restaurant of St. Moritz when he saw Antonietta
Descallar, one of the waitresses of the said Restaurants. He made friends
with the girl and asked her to tutor him in [the] English language.
Antonietta accepted the offer because she was in need of additional
income to support [her] 2 young children who were abandoned by their
father. Their session was agreed to be scheduled every afternoon at the
residence of Antonietta in the squatters area in Gorordo Avenue, Cebu City.
The Austrian was observing the situation of the family particularly the
children who were malnourished. After a few months sessions, Mr. Jambrich
offered to transfer the family into a decent place. He told Antonietta that
the place is not good for the children. Antonietta who was miserable and
financially distressed at that time accepted the offer for the sake of the
children.18
Further, the following additional pieces of evidence point to Jambrich as the
source of fund used to purchase the three parcels of land, and to construct
the house thereon:
(1) Respondent Descallar herself affirmed under oath, during her re-direct
examination and during the proceedings for the adoption of her minor
children, that Jambrich was the owner of the properties in question, but
that his name was deleted in the Deed of Absolute Sale because of legal
constraints. Nonetheless, his signature remained in the deed of sale, where
he signed as buyer.
(2) The money used to pay the subject parcels of land in installments was
in postdated checks issued by Jambrich. Respondent has never opened any
account with any bank. Receipts of the installment payments were also in
the name of Jambrich and respondent.
(3) In 1986-1987, respondent lived in Syria with Jambrich and her two
children for ten months, where she was completely under the support of
Jambrich.
(4) Jambrich executed a Last Will and Testament, where he, as owner,
bequeathed the subject properties to respondent.
Thus, Jambrich has all authority to transfer all his rights, interests and
participation over the subject properties to petitioner by virtue of the Deed
of Assignment he executed on July 11, 1991.
Well-settled is the rule that this Court is not a trier of facts. The findings of
fact of the trial court are accorded great weight and respect, if not finality
by this Court, subject to a number of exceptions. In the instant case, we
find no reason to disturb the factual findings of the trial court. Even the

appellate court did not controvert the factual findings of the trial court.
They differed only in their conclusions of law.
Further, the fact that the disputed properties were acquired during the
couples cohabitation also does not help respondent. The rule that coownership applies to a man and a woman living exclusively with each other
as husband and wife without the benefit of marriage, but are otherwise
capacitated to marry each other, does not apply. 19 In the instant case,
respondent was still legally married to another when she and Jambrich
lived together. In such an adulterous relationship, no co-ownership exists
between the parties. It is necessary for each of the partners to prove his or
her actual contribution to the acquisition of property in order to be able to
lay claim to any portion of it. Presumptions of co-ownership and equal
contribution do not apply.20
Second, we dispose of the issue of registration of the properties in the
name of respondent alone. Having found that the true buyer of the
disputed house and lots was the Austrian Wilhelm Jambrich, what now is
the effect of registration of the properties in the name of respondent?
It is settled that registration is not a mode of acquiring ownership. 21 It is
only a means of confirming the fact of its existence with notice to the world
at large.22 Certificates of title are not a source of right. The mere possession
of a title does not make one the true owner of the property. Thus, the mere
fact that respondent has the titles of the disputed properties in her name
does not necessarily, conclusively and absolutely make her the owner. The
rule on indefeasibility of title likewise does not apply to respondent. A
certificate of title implies that the title is quiet, 23 and that it is perfect,
absolute and indefeasible.24 However, there are well-defined exceptions to
this rule, as when the transferee is not a holder in good faith and did not
acquire the subject properties for a valuable consideration. 25 This is the
situation in the instant case. Respondent did not contribute a single
centavo in the acquisition of the properties. She had no income of her own
at that time, nor did she have any savings. She and her two sons were then
fully supported by Jambrich.
Respondent argued that aliens are prohibited from acquiring private land.
This is embodied in Section 7, Article XII of the 1987 Constitution, 26 which is
basically a reproduction of Section 5, Article XIII of the 1935 Constitution, 27
and Section 14, Article XIV of the 1973 Constitution. 28 The capacity to
acquire private land is dependent on the capacity "to acquire or hold lands
of the public domain." Private land may be transferred only to individuals
or entities "qualified to acquire or hold lands of the public domain." Only
Filipino citizens or corporations at least 60% of the capital of which is
owned by Filipinos are qualified to acquire or hold lands of the public
domain. Thus, as the rule now stands, the fundamental law explicitly
prohibits non-Filipinos from acquiring or holding title to private lands,
except only by way of legal succession or if the acquisition was made by a
former natural-born citizen.29
Therefore, in the instant case, the transfer of land from Agro-Macro
Development Corporation to Jambrich, who is an Austrian, would have been
declared invalid if challenged, had not Jambrich conveyed the properties to
petitioner who is a Filipino citizen. In United Church Board for World
Ministries v. Sebastian,30 the Court reiterated the consistent ruling in a
number of cases31 that if land is invalidly transferred to an alien who

subsequently becomes a Filipino citizen or transfers it to a Filipino, the flaw


in the original transaction is considered cured and the title of the
transferee is rendered valid. Applying United Church Board for World
Ministries, the trial court ruled in favor of petitioner, viz.:
[W]hile the acquisition and the purchase of (sic) Wilhelm Jambrich of the
properties under litigation [were] void ab initio since [they were] contrary
to the Constitution of the Philippines, he being a foreigner, yet, the
acquisition of these properties by plaintiff who is a Filipino citizen from him,
has cured the flaw in the original transaction and the title of the transferee
is valid.
The trial court upheld the sale by Jambrich in favor of petitioner and
ordered the cancellation of the TCTs in the name of respondent. It declared
petitioner as owner in fee simple of the residential house of strong
materials and three parcels of land designated as Lot Nos. 1, 3 and 5, and
ordered the Register of Deeds of Mandaue City to issue new certificates of
title in his name. The trial court likewise ordered respondent to pay
petitioner P25,000 as attorneys fees and P10,000 as litigation expenses,
as well as the costs of suit.
We affirm the Regional Trial Court.
The rationale behind the Courts ruling in United Church Board for World
Ministries, as reiterated in subsequent cases, 32 is this since the ban on
aliens is intended to preserve the nations land for future generations of
Filipinos, that aim is achieved by making lawful the acquisition of real
estate by aliens who became Filipino citizens by naturalization or those
transfers made by aliens to Filipino citizens. As the property in dispute is
already in the hands of a qualified person, a Filipino citizen, there would be
no more public policy to be protected. The objective of the constitutional
provision to keep our lands in Filipino hands has been achieved.
IN VIEW WHEREOF, the petition is GRANTED. The Decision of the Court of
Appeals in C.A. G.R. CV No. 42929 dated April 10, 2002 and its Resolution
dated July 8, 2003 are REVERSED and SET ASIDE. The Decision of the
Regional Trial Court of Mandaue City in Civil Case No. MAN-1148 is
REINSTATED.
SO ORDERED.
G.R. No. 171008
September 13, 2007
CARMELITA FUDOT, Petitioner,
vs.
CATTLEYA LAND, INC., VELASCO, JR., JJ. Respondent.
DECISION
TINGA, J.:
For resolution is a petition that seeks to nullify the Decision 1 and Resolution2 of the
Court of Appeals dated 28 April 2005 and 11 January 2006, respectively, in C.A.G.R.
CV No. 73025 which declared respondent as having a better right over a parcel of
land located in Doljo, Panglao, Bohol.
The facts, as culled from the records, follow.
Sometime in July 1992, Cattleya Land, Inc. (hereinafter referred to as respondent)
asked someone to check, on its behalf, the titles of nine (9) lots, the subject land
included, which it intended to buy from the spouses Troadio and Asuncion Tecson.
Finding no defect on the titles, respondent purchased the nine lots through a Deed of
Conditional Sale on 6 November 1992. Subsequently, on 30 August 1993,
respondent and the Tecsons executed a Deed of Absolute Sale over the same
properties. The Deed of Conditional Sale and the Deed of Absolute Sale were

registered with the Register of Deeds on 06 November 1992 and 04 October 1993,
respectively.3 The Register of Deeds, Atty. Narciso dela Serna, refused to actually
annotate the deed of sale on the titles because of the existing notice of attachment
in connection with Civil Case No. 3399 pending before the Regional Trial Court of
Bohol.4 The attachment was eventually cancelled by virtue of a compromise
agreement between the Tecsons and their attaching creditor which was brokered by
respondent. Titles to six (6) of the nine (9) lots were issued, but the Register of
Deeds refused to issue titles to the remaining three (3) lots , because the titles
covering the same were still unaccounted for.
On 23 January 1995, petitioner presented for registration before the Register of
Deeds the owners copy of the title of the subject property, together with the deed of
sale purportedly executed by the Tecsons in favor of petitioner on 19 December
1986. On the following day, respondent sent a letter of protest/opposition to
petitioners application. Much to its surprise, respondent learned that the Register of
Deeds had already registered the deed of sale in favor of petitioner and issued a new
title in her name.5
On 5 May 1995, respondent filed its Complaint 6 for Quieting Of Title &/Or Recovery
Of Ownership, Cancellation Of Title With Damages before the Regional Trial Court of
Tagbilaran City.7 On 26 June 1995, Asuncion filed a complaint-in-intervention,
claiming that she never signed any deed of sale covering any part of their conjugal
property in favor of petitioner. She averred that her signature in petitioners deed of
sale was forged thus, said deed should be declared null and void. 8 She also claimed
that she has discovered only recently that there was an amorous relationship
between her husband and petitioner.9
Petitioner, for her part, alleged in her answer 10 that the spouses Tecson had sold to
her the subject property for P20,000.00 and delivered to her the owners copy of the
title on 26 December 1986. She claims that she subsequently presented the said
title to the Register of Deeds but the latter refused to register the same because the
property was still under attachment.
On 31 October 2001, the trial court rendered its decision: 11 (i) quieting the title or
ownership of the subject land in favor of respondent; (ii) declaring the deed of sale
between petitioner and spouses Tecson invalid; (iii) ordering the registration of the
subject land in favor of respondent; (iv) dismissing respondents claim for damages
against the Register of Deeds for insufficiency of evidence; (v) dismissing Asuncions
claim for damages against petitioner for lack of factual basis; and (vi) dismissing
petitioners counterclaim for lack of the required preponderance of evidence. 12
According to the trial court, respondent had recorded in good faith the deed of sale
in its favor ahead of petitioner. Moreover, based on Asuncions convincing and
unrebutted testimony, the trial court concluded that the purported signature of
Asuncion in the deed of sale in favor of petitioner was forged, thereby rendering the
sale void.13
Petitioner sought recourse to the Court of Appeals, arguing in the main that the rule
on double sale was applicable to the case. The appellate court, however, dismissed
her appeal, holding that there was no double sale because the alleged sale to
petitioner was null and void in view of the forgery of Asuncions purported signature
in the deed. The appellate court noted that petitioner failed to rebut Asuncions
testimony despite opportunities to do so. 14 Moreover, even if there was double sale,
according to the appellate court, respondents claim would still prevail since it was
able to register the second sale in its favor in good faith, had made inquiries before
it purchased the lots, and was informed that the titles were free from encumbrance
except the attachment on the property due to Civil Case No. 3399. 15
Petitioner sought reconsideration of the decision but the Court of Appeals denied her
motion for reconsideration for lack of merit.16
Petitioner thus presents before this Court the following issues for resolution:
I.
BETWEEN 2 BUYERS OF REGISTERED LAND, WHO HAS THE BETTER RIGHT-IS IT THE
FIRST BUYER WHO WAS GIVEN THE OWNERS DUPLICATE TCT TOGETHER WITH A

DEED OF SALE IN 1986, OR THE SECOND BUYER IN 1992 WITH ONLY A DEED OF
SALE.
II.
IS A BUYER OF REGISTERED LAND WHO DID NOT DEMAND OR REQUIRE THE
DELIVERY OF THE OWNERS DUPLICATE TCT A BUYER IN GOOD FAITH.
III.
II. IN SUBSEQUENT REGISTRATION OF REGISTERED LANDS, AS BY SALE, WHICH LAW
SHALL GOVERN, ARTICLE 1455 OF CIVIL CODE OR P.D. 1529 OR TORRENS SYSTEM. 17
Petitioner avers that she was the first buyer in good faith and even had in her
possession the owners copy of the title so much so that she was able to register the
deed of sale in her favor and caused the issuance of a new title in her name. She
argues that the presentation and surrender of the deed of sale and the owners copy
carried with it the "conclusive authority of Asuncion Tecson" which cannot be
overturned by the latters oral deposition.18
Petitioner claims that respondent did not demand nor require delivery of the owners
duplicate title from the spouses Tecson, neither did it investigate the circumstances
surrounding the absence of the title. These indicate respondents knowledge of a
defect in the title of the spouses and, thus, petitioner concludes that respondent was
not a buyer in good faith.19
Finally, petitioner insists that the applicable law in this case is P.D. No. 1529, a
special law dealing precisely with the registration of registered lands or any
subsequent sale thereof, and not Article 1544 of the Civil Code which deals with
immovable property not covered by the Torrens System.20
Respondent points out, on one hand, that petitioners first two issues which present
an inquiry on who has a better right or which one is a buyer in good faith, are
questions of fact not proper in a petition for review. The third issue, on the other
hand, is ostensibly a question of law which had been unsuccessfully raised below. 21
Respondent maintains that there is no room to speak of petitioner as a buyer in good
faith since she was never a buyer in the first place, as her claim is based on a null
and void deed of sale, so the court a quo found. Respondent also asserts that its
status as a buyer in good faith was established and confirmed in the proceedings
before the two courts below.22
Lastly, respondent argues that P.D. No. 1529 finds no application in the instant case.
The "production of the owners duplicate certificate x x x being conclusive authority
from the registered owner" is only true as between the registration applicant and the
register of deeds concerned, but never to third parties. Such conclusive authority,
respondent adds, is "only for the Register of Deeds to enter a new certificate or to
make a memorandum of registration in accordance with such instrument." It cannot
cure the fatal defect that the instrument from which such registration was effected is
null and void ab initio, respondent concludes. 23
The petition is bereft of merit.
Petitioners arguments, which rest on the assumption that there was a double sale,
must fail.
In the first place, there is no double sale to speak of. Art. 1544 of the Civil Code, 24
which provides the rule on double sale, applies only to a situation where the same
property is validly sold to different vendees. In this case, there is only one sale to
advert to, that between the spouses Tecson and respondent.
In Remalante v. Tibe,25 this Court ruled that the Civil Law provision on double sale is
not applicable where there is only one valid sale, the previous sale having been
found to be fraudulent. Likewise, in Espiritu and Apostol v. Valerio, 26 where the same
parcel of land was purportedly sold to two different parties, the Court held that
despite the fact that one deed of sale was registered ahead of the other, Art. 1544 of
the Civil Code will not apply where said deed is found to be a forgery, the result of
this being that the right of the other vendee should prevail.
The trial court declared that the sale between the spouses Tecson and petitioner is
invalid, as it bears the forged signature of Asuncion. Said finding is based on the
unrebutted testimony of Asuncion and the trial courts visual analysis and

comparison of the signatures in her Complaint-in-Intervention and the purported


deed of sale. This finding was upheld by the Court of Appeals, as it ruled that the
purported sale in petitioners favor is null and void, taking into account Asuncions
unrefuted deposition. In particular, the Court of Appeals noted petitioners failure to
attend the taking of the oral deposition and to give written interrogatories. In short,
she did not take the necessary steps to rebut Asuncions definitive assertion.
The congruence of the wills of the spouses is essential for the valid disposition of
conjugal property.27 Thus, under Article 166 of the Civil Code28 which was still in
effect on 19 December 1986 when the deed of sale was purportedly executed, the
husband cannot generally alienate or encumber any real property of the conjugal
partnership without the wifes consent.
In this case, following Article 173 29 of the Civil Code, on 26 June 1995, or eight and a
half years (8 ) after the purported sale to petitioner, Asuncion filed her Complaintin-Intervention seeking the nullification thereof, and while her marriage with Troadio
was still subsisting. Both the Court of Appeals and the trial court found Asuncions
signature in the deed of sale to have been forged, and consequently, the deed of
sale void for lack of marital consent. We find no reason to disturb the findings of the
trial court and the Court of Appeals. Findings of fact of lower courts are deemed
conclusive and binding upon the Supreme Court subject to certain exceptions, 30 none
of which are present in this case. Besides, it has long been recognized in our
jurisprudence that a forged deed is a nullity and conveys no title.31
Petitioner argues she has a better right over the property in question, as the holder
of and the first one to present, the owners copy of the title for the issuance of a new
TCT. The Court is not persuaded.
The act of registration does not validate petitioners otherwise void contract.
Registration is a mere ministerial act by which a deed, contract, or instrument is
sought to be inscribed in the records of the Office of the Register of Deeds and
annotated at the back of the certificate of title covering the land subject of the deed,
contract, or instrument. While it operates as a notice of the deed, contract, or
instrument to others, it does not add to its validity nor converts an invalid
instrument into a valid one as between the parties, 32 nor amounts to a declaration by
the state that the instrument is a valid and subsisting interest in the land. 33 The
registration of petitioners void deed is not an impediment to a declaration by the
courts of its invalidity.
Even assuming that there was double sale in this case, petitioner would still not
prevail. The pertinent portion of Art. 1544 provides:
Art. 1544. x x x.
Should it be immovable property, the ownership shall belong to the person acquiring
it who in good faith first recorded it in the Registry of Property.
x x x x.
In interpreting this provision, the Court declared that the governing principle is
primus tempore, potior jure (first in time, stronger in right). Knowledge gained by the
first buyer of the second sale cannot defeat the first buyers rights, except where the
second buyer registers in good faith the second sale ahead of the first as provided
by the aforequoted provision of the Civil Code. Such knowledge of the first buyer
does not bar him from availing of his rights under the law, among them to register
first his purchase as against the second buyer. However, knowledge gained by the
second buyer of the first sale defeats his rights even if he is first to register the
second sale, since such knowledge taints his prior registration with bad faith. 34 It is
thus essential, to merit the protection of Art. 1544, second paragraph, that the
second realty buyer must act in good faith in registering his deed of sale. 35
We agree with the trial court and the Court of Appeals that respondent was a buyer
in good faith, having purchased the nine (9) lots, including the subject lot, without
any notice of a previous sale, but only a notice of attachment relative to a pending
civil case. In fact, in its desire to finally have the title to the properties transferred in
its name, it persuaded the parties in the said case to settle the same so that the
notice of attachment could be cancelled.

Relevant to the discussion are the following provisions of P.D. No. 1529:
Sec. 51. Conveyance and other dealings by registered owner. An owner of
registered land may convey, mortgage, lease, charge or otherwise deal with the
same in accordance with existing laws. He may use such forms of deeds, mortgages,
lease or other voluntary instruments as are sufficient in law. But no deed, mortgage,
lease or other voluntary instrument, except a will purporting to convey or affect
registered land shall take effect as a conveyance or bind the land, but shall operate
only as a contract between the parties and as evidence of authority to the Register
of Deeds to make Registration.
The act of registration shall be the operative act to convey or affect the land insofar
as third persons are concerned, and in all cases under this Decree, the registration
shall be made in the office of the Register of Deeds for the province or city where the
land lies. (Emphasis supplied)
Sec. 52. Constructive notice upon registration.Every conveyance, mortgage, lease,
lien attachment, order, judgment, instrument or entry affecting registered land shall,
if registered, filed or entered in the office of the Register of Deeds for the province or
city where the land to which it relates lies, be constructive notice to all persons from
the time of such registering, filing or entering.
It has been held that between two transactions concerning the same parcel of land,
the registered transaction prevails over the earlier unregistered right. The act of
registration operates to convey and affect the registered land so that a bona fide
purchaser of such land acquires good title as against a prior transferee, if such prior
transfer was unrecorded.36 As found by the courts a quo, respondent was able to
register its purchase ahead of petitioner. It will be recalled that respondent was able
to register its Deed of Conditional Sale with the Register of Deeds as early as 6
November 1992, and its Deed of Absolute Sale on 14 October 1993. On the other
hand, petitioner was able to present for registration her deed of sale and owners
copy of the title only on 23 January 1995, or almost nine years after the purported

sale. Why it took petitioner nine (9) years to present the deed and the owners copy,
she had no credible explanation; but it is clear that when she finally did, she already
had constructive notice of the deed of sale in respondents favor. Without a doubt,
respondent had acquired a better title to the property.1wphi1
Finally, anent petitioners claim that P.D. No. 1529 applies to registered lands or any
subsequent sale thereof, while Art. 1544 of the Civil Code applies only to immovable
property not covered by the Torrens System, suffice it to say that this quandary has
already been answered by an eminent former member of this Court, Justice Jose
Vitug, who explained that the registration contemplated under Art. 1544 has been
held to refer to registration under P.D. No. 1529, thus:
The registration contemplated under Art. 1544 has been held to refer to registration
under Act 496 Land Registration Act (now PD 1529) which considers the act of
registration as the operative act that binds the land (see Mediante v. Rosabal, 1 O.G.
[12] 900, Garcia v. Rosabal, 73 Phil 694). On lands covered by the Torrens System,
the purchaser acquires such rights and interest as they appear in the certificate of
title, unaffected by any prior lien or encumbrance not noted therein. The purchaser
is not required to explore farther than what the Torrens title, upon its face, indicates.
The only exception is where the purchaser has actual knowledge of a flaw or defect
in the title of the seller or of such liens or encumbrances which, as to him, is
equivalent to registration (see Sec. 39, Act 496; Bernales v. IAC, G.R. 75336, 18
October 1988; Hernandez vs. Sales, 69 Phil 744; Tajonera s. Court of Appeals, L26677, 27 March 1981) (Emphasis supplied)37
WHEREFORE, the petition is DENIED. The assailed decision and resolution of the
Court of Appeals are affirmed. Costs against petitioner.
SO ORDERED.